USD/JPY: Strong support emerges around 108.20 – UOB

The downtrend in USD/JPY is expected to meet relevant support around 108.20, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the swift and sharp decline appears to be overdone and USD is unlikely to weaken further’ and we expected USD to ‘consolidate and trade between 108.40 and 109.10’. Our view was not wrong even though USD traded within a narrower range than expected (108.45/109.05). The underlying tone has improved somewhat but while USD could edge higher, it is not expected to challenge the strong resistance level at 109.35 (109.10 is already quite a solid resistance). Support is at 108.75 followed by 108.60.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (10 May, spot at 108.80). As highlighted, the near-term bias is on the downside but we are mindful of the strong support at 108.20. This level is followed by another rather strong level at 108.00. All in, the downward bias is deemed intact as long as USD does not move above 109.35 (‘strong resistance’ level).”