USD/JPY keeps the bearish outlook, potential test of 108.10 – UOB

FX Strategists at UOB Group remain bearish on the pair, while there is still room for a probable test of 108.10.

Key Quotes

24-hour view: “We indicated last Friday that a ‘test’ of the June’s low of 108.80 is likely but a sustained down-move is not expected. In line with expectation, USD touched a low of 108.73 before rebounding. While downward momentum has eased with the recovery, it is too early to expect a sustained up-move. USD is more likely to consolidate its recent loss and trade sideways at these lower levels. Expected range for today; 108.85/109.50”.

Next 1-3 weeks: “While USD exceeded the June’s low of 108.80 last Friday, the rapid and strong recovery from a low of 108.73 came as a surprise. Shorter-term downward momentum has eased but only a move back above 110.10 (stop-loss level unchanged) would indicate that the bearish phase has ended. Until then, there is still room for the current USD weakness to extend lower to 108.10. Those who are looking to sell may like to wait for a stronger bounce to 109.80 (instead of averaging between 109.50 and 109.80 as suggested previously)”.