USD/JPY: Might not be able to break the significant support at 151.80 – UOB Group

US Dollar (USD) could drop further; given the oversold conditions, it might not be able to break the significant support at 151.80. In the longer run, outlook for USD is negative but note the significant support level at 151.80, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD is negative but might not reach 151.80

24-HOUR VIEW: “We noted in early Asian trade yesterday that USD ‘is under mild downward pressure and could edge lower.’ However, we were of the view that ‘any decline is unlikely to break below 153.70.’ We did not expect the steep selloff that sent USD plunging by 1.12% (152.60). Despite the deeply oversold conditions, the weakness has not stabilised. Today, USD could drop further, but given the oversold conditions, it might not be able to break the significant support at 151.80. Note that yesterday’s low of 152.10 is expected to provide support as well. On the upside, any recovery is likely to remain below 153.50 (minor resistance is at 153.00).”

1-3 WEEKS VIEW: “Two days ago (04 Feb, spot at 155.20), we indicated, USD ‘is likely to trade in a 153.70/156.70 range for the time being.’ Yesterday, we highlighted that ‘looking ahead, if USD were to break and remain below 153.70, it could trigger a sustained drop.’ However, we did not expect the sudden sharp plunge that reached a low of 152.10. While we are revising our outlook for USD to negative, note that there is a significant support level at 151.80. We will maintain our view provided that USD remains below 154.30.”