USD/JPY outlook still unclear, rangebound likely near term – UOB

FX Strategists at UOB Group noted the pair’s outlook stays unclear, although extra sideline appears probable in the near term.

Key Quotes

24-hour view: “Instead of extending its decline (as expected yesterday), USD rebounded strongly from a low of 110.45. The underlying tone has improved with the recovery but any further USD strength is not expected to break above the major 111.50 resistance (minor resistance is at 111.30). Support is at 110.65 followed by 110.40”.

Next 1-3 week: “The price action in USD continues to confound us as it surrendered most of the gains made over the past two days. Note that USD rebounded strongly from a low of 110.10 Monday (13 Aug) and hit a high of 111.42 yesterday (15 Aug) before dropping sharply and closed at 110.73 in NY (-0.36%). As highlighted yesterday, the outlook is unclear and it appears that USD is trading in a broad range now. After yesterday’s price action, the expected range is likely lower between 109.85 and 111.50 (instead of 110.30/112.20 as expected previously)”.