USD/JPY: A deeper pullback lies below 109.10 – UOB

USD/JPY faces further losses if 109.10 is cleared in the near term, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD closed on a soft note at 109.21 (-0.16%) in NY but rebounded during early Asian hours. Waning downward momentum coupled with oversold conditions suggests limited downside risk for USD. For today, USD is likely to consolidate and trade between 109.10 and 109.70.”

Next 1-3 weeks: “Our latest narrative was from last Friday (17 Sep, spot at 109.75) where USD ‘is likely to consolidate and trade between 109.30 and 110.25’. Despite dropping below 109.30 yesterday (21 Sep), downward momentum has not improved by much. Looking ahead, USD has to close below 109.10 before a sustained decline can be expected. The prospect for a daily closing below 109.10 is not high for now but would remain intact as long as USD does not move above 110.00 within these few days. Looking ahead, if USD closes below 109.10, the odds for a break of August’s low near 108.70 would be quite high.”