The bearish momentum in USD/JPY has accelerated and it could now break below 106.25 in the next weeks, suggested FX Strategists at UOB Group.
“Our expectation for USD to trade sideways was incorrect as it closed on a weak note at 106.85 (-0.27%). USD extended its decline upon opening this morning and downward momentum has increased considerably. From here, barring a move back above 107.00, USD is expected to weaken further even though the support at 106.25 could be just out of reach.”
Next 1-3 weeks:
“On Wednesday (22 Jul, spot at 106.85), we highlighted that “downward momentum has ticked up and from here, USD could drift lower but in view of the nascent build-up in momentum, any weakness may struggle to move below 106.25”. USD closed on a soft note yesterday (106.85, -0.27%) and extended its decline this morning. Downward momentum has improved quite a fair bit and from here, the risk of a break of 106.25 has increased. That said, there is another strong support at 106.00 and this level may not be easy to crack. Overall, only a move above 107.25 (‘strong resistance’ previously at 107.50) would indicate the current downward pressure has eased.”