Japanese Yen: Fading momentum clouds gains against US Dollar - UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that USD/JPY rebounded sharply to 157.64 instead of consolidating, with the move seen as overdone and likely to lead to intraday range-trading between 156.90 and 157.80. On a 1–3 week view, the earlier strong downside momentum is slowing, and a break above 157.80 would signal a shift into a range-trading phase rather than further declines, though the broader 1–3 month outlook still points to downside risks.

Overdone bounce within wider downtrend

"24-HOUR VIEW: We expected USD to “consolidate between 156.40 and 157.30.” Instead of consolidating, USD rose to a high of 157.64. The rapid rise appears to be overdone, and USD is unlikely to rise much further. Today, USD is more likely to trade in a range between 156.90 and 157.80."

"1-3 WEEKS VIEW: After the steep decline in USD last Thursday, we highlighted last Friday (23 Oct, spot at 156.60) that “the rapid increase in downward momentum suggests USD is likely to decline further.” We added, “support levels are 156.00 and 155.50.” Yesterday, USD rebounded to a high of 157.64. Downward momentum is slowing, and a break above 157.80 (no change in ‘strong resistance’ level) would indicate that USD is likely to range-trade instead of heading lower."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)