USD/JPY: A drop to 103.18 looks unlikely near-term – UOB

USD/JPY still risks further downside but a move to the 103.18 level appears unfavourable in the short-term horizon, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “Last Friday, we held the view that USD ‘could dip to 103.60 first before a more sustained rebound can be expected’. Our expectation did not materialize as USD traded in a quiet manner between 103.69 and 103.90. The underlying tone has firmed somewhat and there is room for USD to edge upwards but any advance is viewed as a higher trading range of 103.60/104.05 (a sustained rise above 104.05 is not expected).”

Next 1-3 weeks: “There is not much to add to our update from last Thursday (19 Nov, spot at 103.90). As highlighted, ‘while the underlying tone still appears soft, the prospect for USD to move to 103.18 from here is not high’. Since then, USD has not done much as it traded in a quiet manner over the past couple of days. We continue to hold the same view for now and only a break of 104.50 (no change in ‘strong resistance’ level) would indicate that the current mild downward pressure has eased.”