USD/JPY shifted to bearish from neutral – UOB

FX Strategists at UOB Group have shifted their focus on the pair to bearish from neutral in the near term.

Key Quotes

“The target indicated at 111.35 last Friday was exceeded as USD dropped sharply to a low of 110.98. The combination of strong downward momentum coupled with weak daily closing suggests further downward pressure towards 110.70. Resistance is at 111.40 followed by 111.70. The latter level is expected to be strong enough to cap any intraday rebound”.

“While we have held the same view that “USD is under immediate downward pressure to 111.00” since last Wednesday (19 Jul, spot at 111.95), the rapid pace of the decline that easily took out 111.00 was unexpected (low of 110.90 at the time of writing). The outlook for USD has shifted to bearish but oversold conditions suggest that downside extension could be limited to 110.20. Those looking to sell may like to wait for a bounce to 111.50 to enter short with a stop-loss at 112.00”.