USD/JPY: Likely to trade with a downward bias – UOB Group

US Dollar (USD) is likely to trade with a downward bias; any decline is viewed as part of a lower range of 155.80/157.00. In the longer run, rapid increase in momentum indicates further USD weakness, with a technical target at 154.90, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

Rapid increase in momentum indicates further USD weakness

24-HOUR VIEW: “The sharp drop in USD that sent it plunging to 155.93 was surprising (we were expecting range trading). The sharp and swift selloff seems to be excessive. However, the weakness does not appear to have stabilized just yet, and it is premature to expect a stabilization. Overall, USD is more likely to trade with a downward bias today. However, any weakness is viewed as part of a lower range of 155.80/157.00. To look at it another way, a sustained decline below 155.80 is unlikely today.”

1-3 WEEKS VIEW: “We indicated two days ago that (14 Jan, spot at 157.50) that ‘the current price movements are likely part of a consolidation phase, expected to be between 156.50 and 158.50.’ Yesterday, USD decisively broke below 156.50, reaching a low of 155.93. The rapid increase in momentum indicates further USD weakness. The technical target is near 154.90. To sustain the rapid buildup in momentum, USD must remain below the ‘strong resistance’ level, currently at 157.60.”