USD/JPY faces extra range bound near term – UOB

There are no changes to the consolidative mood in USD/JPY for the next few weeks, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: We did not anticipate USD to drop sharply to a low of 139.91 yesterday (we were expecting range-trading). Despite the rebound from the low, the risk is tilted to the downside. However, as downward momentum is not strong, any decline is unlikely to break clearly below 139.50. Resistance is at 140.80, followed by 141.10. 

Next 1-3 weeks: After USD surged to a high of 141.95 last week, we highlighted on Monday (24 Jul, spot at 141.70) that USD could rise to 143.00. USD did not make any further advance, and yesterday (26 Jul, spot at 141.00), we indicated that “the chance of USD rising to 143.00 has decreased.” In NY trade, USD fell below our ‘strong support’ level of 140.00 (low of 139.91). The breach of the ‘strong support’ level indicates that upward pressure has eased. The current price movements are likely part of a consolidation, and we expect USD to trade in a range of 138.50/141.95 for now.