USD/JPY moved into a consolidative theme – UOB

According to FX Strategists at UOB Group, USD/JPY now faces some consolidation between 108.20 and 109.50 in the next weeks.

Key Quotes

24-hour view: “We expected USD to ‘trade between 108.75 and 109.35’ last Friday. However, USD dropped to 108.59 before closing little changed at 108.87 (-0.01%). The underlying tone has weakened somewhat and the bias for USD is tilted to the downside. That said, any weakness is unlikely to break the major support at 108.50. Resistance is at 109.10 followed by 109.30.”

Next 1-3 weeks: “We have held a positive view in USD for more than 3 weeks now. In our latest narrative from last Friday (19 Mar, spot at 109.00), we highlighted that ‘barring a sudden surge above 109.35, the odds for USD to move to the next resistance at 109.85 are low’. USD subsequently dropped to 108.59. While our ‘strong support’ level at 108.50 is still intact, upward momentum has more or less dissipated. In the word, the positive phase that started in late February has run its course. The current movement is viewed as part of a consolidation phase and USD is expected to trade between 108.20 and 109.50 for now.”