USD/JPY under pressure, looks to 105.20 – UOB

In view of FX Strategists at UOB Group, a close below 105.20 should shift the pair’s near term outlook to bearish from neutral.

Key Quotes

24-hour view: “While we expected a higher USD yesterday, we were of the view that a sustained move above 106.70 is unlikely. USD eased off after touching a high of 106.46 but plunged early this morning after news of Cohn’s resignation. The rapid decline has scope to test last week’s low near 105.25 but a sustained move below the next support at 105.00 seems unlikely. Resistance is at 105.90 followed by 106.20. We do not expect the 106.46 high to come into the picture for now”.

Next 1-3 weeks: “we highlighted that the prospect for USD to enter a bearish has diminished but remains intact unless it can reclaim the strong 106.70 resistance. USD touched a high of 106.46 during Asian hour yesterday but plummeted after NY close on the back of news of Cohn’s resignation. While the undertone has clearly weakened, it is too early to expect the start of a sustained decline. Only a NY close below 105.20 would indicate that a move towards 104.50, 104.00 has started. Overall, after the sharp drop early this morning, USD is expected to stay under pressure (at least for the next few days) unless it can move and stay above the high near 106.45 yesterday”.