USD/JPY: Must break and close below 148.65 to continue to declining – UOB Group

To continue to decline, the US Dollar (USD) must break and close below 148.65, which is acting as a significant support level now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

The next significant support level below 148.65 is at 146.95

24-HOUR VIEW: “USD plummeted to 149.06 on Monday before rebounding. Yesterday, we pointed out that ‘despite the sharp decline, downward momentum has not increased much.’ We expected USD to ‘trade in a range between 149.00 and 150.50.’ Our view was incorrect, as USD plummeted briefly to 148.63, rebounding sharply to close unchanged at 149.59. The brief drop did not result in any increase in momentum, and we continue to expect USD to trade in a range, probably between 148.80 and 150.30.”

1-3 WEEKS VIEW: “We shifted our outlook to negative late last week. Tracking the subsequent decline, we indicated yesterday (03 Dec, spot at 149.85) that USD ‘may continue to decline, but given that downward momentum has not increased much further, it is unclear if there is enough momentum for it to reach 148.65.’ USD subsequently dropped briefly to 148.63, rebounding to close unchanged at 149.59. There is still no clear increase in momentum, and for USD to continue to decline, it must break and close below 148.65, which is acting as a significant support level now. On the upside, should USD break above 150.80 (‘strong resistance’ level previously at 151.30), it would indicate that the weakness in USD has stabilised. Looking ahead, the next significant support level below 148.65 is at 146.95.”