USD/JPY: Further downside lies below 106.70 – UOB

In opinion of FX Strategists at UOB Group, the selling pressure in USD/JPY is forecasted to gather traction on a breach of 106.70.

Key Quotes

24-hour view: “We expected USD to trade sideways between 106.70 and 107.20 last Friday. While our expectation for sideway-trading was not wrong, USD traded within a narrower range than anticipated (between 106.75 and 107.09). The price action offers no fresh clues and USD is likely to continue to trade sideways. Expected range for today, 106.70/107.15.”

Next 1-3 weeks: “After closing largely unchanged for 3 days in a row, USD slipped and closed down by -0.30% yesterday (17 Jun). Downward momentum is showing sign of picking up but as highlighted since last Thursday (11 Jun, spot at 107.05), USD has to close below 106.70 before a sustained decline can be expected. The prospect for such a move has increased and would continue to increase as long as USD does not move back above 107.60 (‘strong resistance’ level previously at 108.00). Looking forward, if USD closes below 106.70, it could weaken towards last month’s low near 106.00.”