USD/JPY faces strong support at 107.65 – UOB

FX Strategists at UOB Group noted the outlook for USD/JPY remains tilted to the downside in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the underlying tone still appears to be a tad soft but any weakness is viewed as part of a lower range of 107.80/108.25’. We added, ‘a clear break of 107.80 is unlikely’. In line with our expectations, USD traded between 107.80 and 108.23 before closing little changed at 107.96 (-0.08%). The bias for today appears to be tilted to the downside but the major support at 107.65 is unlikely to come under threat (107.80 is already quite a strong level). On upside, a break 108.25 (minor resistance is at 108.10) would indicate that the current mild downward pressure has eased.”

Next 1-3 weeks: “USD traded in a quiet manner for the past couple of days and our latest narrative from Tuesday (20 Apr, spot at 108.15) still stands. As highlighted, USD is likely to weaken further but the major support at 107.65 may not come into the picture so soon. On the upside, a break of 108.55 (‘strong resistance’ level previously at 108.85) would indicate that the pullback in USD that started about 2 weeks ago (see annotations in the chart below) has run its course. Looking ahead, the next support below 107.65 is at 107.30.”