Japanese Yen: Can gains against US Dollar hold as momentum fades? - UOB

USD/JPY looks set for intraday range-trading between 156.90 and 157.80 after a sharp rebound to 157.64, rather than the expected consolidation, according to United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann. They see the advance as overdone. Over 1–3 weeks, the previously strong downward momentum is easing; a break above 157.80 would indicate a transition to range-trading rather than further losses. The wider 1–3 month outlook, however, continues to suggest downside risks.

Can the overdone rebound alter the broader downtrend?

"24-HOUR VIEW: We expected USD to “consolidate between 156.40 and 157.30.” Instead of consolidating, USD rose to a high of 157.64. The rapid rise appears to be overdone, and USD is unlikely to rise much further. Today, USD is more likely to trade in a range between 156.90 and 157.80."

"1-3 WEEKS VIEW: After the steep decline in USD last Thursday, we highlighted last Friday (23 Oct, spot at 156.60) that “the rapid increase in downward momentum suggests USD is likely to decline further.” We added, “support levels are 156.00 and 155.50.” Yesterday, USD rebounded to a high of 157.64. Downward momentum is slowing, and a break above 157.80 (no change in ‘strong resistance’ level) would indicate that USD is likely to range-trade instead of heading lower."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)