USD/JPY now sees within 109.30/110.55 range – UOB

Further rangebound in USD/JPY remains favoured for the time being, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectations for USD to consolidate yesterday were wrong as it surged to a high of 110.06. While rapid advance appears to be running ahead of itself, there is room for the current USD strength to test 110.20 first before easing off. The next resistance at 110.55 is not expected to come into the picture. Support is at 109.70 followed by 109.50.”

Next 1-3 weeks: “We highlighted yesterday (18 Aug, spot at 109.25) that ‘risk for USD is still on the downside’. We added, ‘the downside risk is deemed intact as long as USD does not move above 109.90’. We did not anticipate the strong surge that sent USD soaring to a high of 110.06. The breach of 109.90 indicates that the USD weakness that started earlier this week (see annotations in the chart below) ended sooner than expected. Despite the strong bounce yesterday, it is too early to expect a sustained advance. From here, USD could trade within a 109.30/110.55 range for a period of time.”