USD/JPY still bearish, could slip back to 110.30 – UOB

The pair could retreat to the 110.30 area amidst the current bearish outlook, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected a lower USD yesterday but the ease of which the strong support at 111.65 was taken out was not exactly expected. From here, a move below the overnight low of 111.13 would not be surprising but in view of severely oversold conditions, a sustained move below the next support at 110.70 seems unlikely for now. Overall, this pair is expected to stay under pressure unless it can reclaim 111.90 (minor resistance is at 111.60)”.

Next 1-3 weeks: “We have been expecting USD to move lower and ‘test’ last month month’s low of 111.65 since early this week. However, the ease of which this strong support was breached came as a surprise. The next ‘target’ at 111.00 appears to be within reach and a clear break of this level would shift the focus to 110.35. ‘Stop-loss’ is adjusted lower to 112.20 from 113.00. On a shorter-term note, 111.90 is already a strong resistance”.