USD/JPY points to further consolidation – UOB

No changes to the consolidative stance in USD/JPY, which is still seen within the 109.30-110.55 range in the next weeks, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the current movement is deemed as part of a consolidation phase’ and we expected USD to ‘trade sideways within a 109.75/110.30 range’. Our view for consolidation was not wrong but USD traded within a much narrower range than expected (109.90/110.11). USD opened on a soft in Asia and the bias is shifting to the downside. That said, any weakness is unlikely to challenge the major support at 109.50 (109.70 is already quite a strong support). Resistance is at 110.00 followed 110.15.”

Next 1-3 weeks: “We have expected USD to trade within 109.30/110.55 range for about 2 weeks now. In our latest narrative from Wednesday (01 Sep, spot at 110.10), we highlighted that the risk of a break of 110.55 has increased. We added, the risk would continue to increase as long as USD does not move below 109.50 within these few days. While 109.50 is still intact, the build-up in shorter-term momentum fizzled out quickly as USD traded in a muted manner the past couple of days. The price actions suggest that USD is still consolidating and it could continue to trade within a 109.30/110.55 range for now.”