USD/JPY now risks a move to the mid-107.00s – UOB

FX Strategists at UOB Group suggest that, in light of the recent performance, there is the possibility that USD/JPY could drop and test the mid-107.00s in the next weeks. 

• "24-hour view: The sharp and rapid decline in USD came as a surprise as it registered the largest 1-day decline in 10 weeks (108.02, -0.74%). While oversold, the decline has scope to extend lower even though the strong 107.75 support may not yield so easily (next support is at 107.50). On the upside, only a move back above 108.35 (minor resistance at 108.20) would indicate the current weakness has stabilized.
• Next 1-3 weeks: We highlighted on Tuesday (29 Oct, spot at 109.00) that USD is expected to “trade with an upside bias towards 109.30”. We added, “the prospect for a sustained advance above this level is not that high”. While USD touched 109.28 on Wednesday (30 Oct), the subsequent sharp plunge came as a surprise. The risk has swing quickly to the downside and from here, USD could trade lower towards 107.50 within the next several days (next support is at 107.00). Only a move above 108.60 would indicate that our view is wrong."