USD/JPY faces further rangebound near term – UOB

USD/JPY is seen sticking to the consolidative mood in the next weeks, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘momentum indicators are neutral’ and expected USD to ‘consolidate between 106.40 and 107.10’. While our expectation was not wrong, USD traded within a narrower range than expected (between 106.62 and 107.10). The underlying tone has weakened somewhat and from here; USD could dip below last week’s low at 106.34. For today, the next support at 106.00 is not likely to come into the picture. Resistance is at 106.85 but the stronger level is at 107.05.”

Next 1-3 weeks: “Our expectation for USD ‘to weaken to 106.00’ from last Thursday (29 Apr, spot at 106.65) did not materialize as it rebounded strongly and took out the ‘strong resistance’ level at 107.35. Downward pressure has eased and USD has likely moved into a consolidation phase. In other words, USD is likely to trade sideways from here, expected to be within 106.00/107.50 range. Looking further ahead, USD has to close below 106.00 before a sustained weakness can be expected.”