USD/JPY attention is now on 108.30 – UOB

The pair stays neutral near term and could grind lower to the 108.30 region in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The solid resistance highlighted at 109.50 yesterday was unchallenged as USD eased off quickly after touching a high of 109.39. The undertone has weakened somewhat and the pullback from the high has scope to extend lower. That said, last Friday low near 108.60 is acting as a strong support now and this level is unlikely to crack so easily (next support is at 108.30). On the upside, the major resistance remains unchanged at 109.50”.

Next 1-3 weeks: “As highlighted last Friday (04 May, spot at 109.15), a break of 108.80 would indicate that USD has made a short-term top at 110.02 last Wednesday, 02 May (USD subsequently hit a low of 108.62 during NY hours on Friday). However, there is no change to the current neutral outlook for USD but the current pullback has scope to extend lower to 108.30 in the coming days (with lower odds for extension to 107.90). Only a break above the ‘key resistance’ at 109.85 would indicate that the immediate downward pressure has eased. On a shorter-term note, 109.50 is already a rather strong resistance”.