USD/JPY: Downside focused on 104.70 – UOB

USD/JPY risks further losses if the 104.70 level is cleared in the near-term, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for USD to ‘probe 104.90 first before a rebound can be expected’ did not materialize as it traded within a 105.07/105.49 range. The price actions offer no fresh clues and USD could continue to trade sideways for now, likely between 105.05 and 105.55.”

Next 1-3 weeks: “Yesterday, we indicated that the outlook for USD is mixed and held the view that it ‘could trade between 105.00 and 106.00 for a period of time’. The rapid manner by which it approaches the bottom of the range was not exactly expected (overnight low of 105.02) and downward momentum has improved a tad. While the bias is tilted to the downside, USD has to close below 104.70 before a sustained decline can be expected. For now, the prospect for such a move is not high but it would increase quickly as long as USD does not move above 105.70 within these few days.”