USD/JPY neutral, moved into a consolidative phase – UOB

FX Strategists at UOB Group noted the pair has likely returned to a consolidative theme.

Key Quotes

24-hour view: “The strong recovery from yesterday’s low of 110.01 appears to be running ahead of itself and further sustained USD strength seems unlikely. That said, there is scope for a test of 110.95 but a break above the next resistance at 111.30 would come as a surprise (there is another strong resistance at 111.45). On the downside, support is at 110.40 followed by 110.20. The low near 110.00 is not expected to come into the picture”.

Next 1-3 weeks: “In our last update on Tuesday (21 Aug, spot at 110.05), we held the view that USD has scope to test the major 109.35 support. USD subsequently dropped to a low of 109.76 during NY hours on Tuesday before staging a surprisingly strong rebound. Downward pressure has eased with the recovery and USD has likely moved back into a consolidate range. From here, we expect USD to trade sideways, likely between 109.90 and 111.45”.