USD/JPY: To trade in a range between 155.00 and 156.00 – UOB Group

US Dollar (USD) is likely to trade in a range between 155.00 and 156.00. In the longer run, despite no pickup in downward momentum, there is a chance for USD to drop further to 154.40, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD to drop further to 154.40

24-HOUR VIEW: “In early Asian trade yesterday, we noted that ‘downward momentum is building.’ We highlighted that USD ‘could break below 154.90, but the next major support at 154.40 is likely out of reach for now.’ We pointed out ‘resistance levels are at 155.75 and 156.25.’ Our view was not wrong, as USD/JPY rose to 156.20 and then plummeted to a low of 154.76. USD rebounded from the low before closing largely unchanged at 155.50 (-0.06%). Slowing downward momentum suggests the downward pressure is easing. Instead of weakening, today, USD is more likely to trade in a range between 155.00 and 156.00.”

1-3 WEEKS VIEW: “In our most recent narrative from last Friday (17 Jan, spot at 156.20), we indicated that USD ‘remains weak.’ We also indicated that ‘if it breaks below 154.90, the next objective will be at 154.40.’ Yesterday, USD fell below 154.90, rebounding from a low of 154.76. Despite no pickup in downward momentum, there is a chance for USD to drop further to 154.40. Overall, only a breach of 156.50 (‘strong resistance’ level previously at 156.70) would mean USD is not weakening further.”