USD/JPY unlikely to breach 107.00 – UOB

FX strategists at UOB Group suggest that in light of the recent price action in USD/JPY a breakdown of the 107.00 looks quite difficult in the short-term horizon.

• "24-hour view: While our view that the 'next support at 107.50 is unlikely to come under threat' was not wrong, the swift and sharp recovery in USD from a low of 107.75 came as a surprise. The rebound appears to running ahead of itself but with no sign of easing just yet, USD could edge above the overnight high of 108.50. However, the next resistance at 108.85 is not expected to come into the picture. Support is at 108.15 followed by 107.95.
• Next 1-3 weeks: We held the view last Thursday (02 Jan, spot at 108.70) that USD is 'expected to trade with a downward bias but the November's low of 107.87 could be out of reach'. While our view for USD to move lower was not wrong, the sudden and sharp pick-up in momentum was unexpected as USD plunged to a low of 107.82 on Friday. The rapid decline appears to be running ahead of itself but with no sign of stabilization, USD could continue to weaken from here. At this stage, the prospect of a break of the major 107.00 support is not high. On the upside, only a move above 108.85 would indicate that the current weakness has stabilized."