USD/JPY a test of 104.70 loses traction – UOB

In opinion of the research team at UOB Group, the likeliness of USD/JPY to test the 104.70 area seems to have eased somewhat in the near term.

Key Quotes

“While the expectation for USD to stay below last Friday’s 104.30/35 high was correct, the sharp drop to a low of 103.12 was unexpected. The recent strong upward pressure has clearly eased and the current movement is viewed as the early stages of a consolidation phase”.

“While the bullish phase that started last Monday is still intact, the USD rally over the past week is clearly overstretched and the odds for further extension to 104.70 are not high (last Friday 104.30 high is already acting as a very strong resistance). However, only a break below the stop-loss at 102.60 would indicate that the bullish phase has ended”.