USD/JPY could re-test 109.50 near term – UOB

The downside bias could drag USD/JPY to the mid-109.00s in the next weeks, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘the rapid decline has room to extend lower but oversold conditions suggest that the major support at 109.50 is out of reach’. Our expectations did not materialize as USD traded between 109.70 and 110.08 before settling slightly lower at 109.86 (-0.12%). Downward pressure appears to have eased and for today, USD is likely to trade sideways between 109.65 and 110.15.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (15 Jul, spot at 109.95). As highlighted, shorter-term downward momentum is beginning to improve and USD is likely to trade with a downward bias towards 109.50. At this stage, the odds for a sustained decline below this level are not high. The current mild downward pressure is deemed intact as long the ‘strong resistance’ at 110.55 is not breached.”