UOB Group’s FX Strategists noted USD/JPY is still expected to navigate within the 109.20/110.60 range in the next weeks.
24-hour view: “We expected USD to weaken yesterday but we were of the view that ‘any decline is not expected to break the support at 109.50’. The subsequent weakness exceeded our expectations as USD took out 109.50 and dropped to 109.41. While the decline is oversold, further USD weakness is not ruled out. However, a break of the major support at 109.20 is unlikely. Resistance is at 109.75 followed by 110.00.”
Next 1-3 weeks: “Our update from Wednesday (28 Jul, spot at 109.85) still stands. As highlighted, USD could trade within a 109.20/110.60 range for now. While shorter-term downward momentum has improved somewhat, USD has to close below 109.05 before a sustained decline can be expected. The prospect for USD to close below 109.05 is not high but it would remain intact as long as USD does not move above 110.00 within these few days.”