Extra losses could drag USD/JPY to the 132.00 region and below in the next few weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
Key Quotes
24-hour view: “While we expected ‘the oversold weakness in USD to extend’ last Friday, we were of the view that ‘a break of the major support at 133.80 is unlikely’. The subsequent sharp sell-off that sent USD plunging to 132.49 came as a surprise. While deeply oversold, the weakness in USD has not stabilized. From here, barring a break above 134.00 (minor resistance is at 133.50), USD could weaken to 132.00 (minor support is at 132.50) before stabilization is likely. For today, the major support at 131.70 is unlikely to come under threat.”
Next 1-3 weeks: “We turned negative USD last Thursday (28 Jul, spot 135.90). As USD dropped, we highlighted on Friday (29 Jul, spot at 134.50) that downward momentum remains strong and USD is likely to weaken further to 133.80. The anticipated USD weakness exceeded our expectations as USD easily cracked 133.80 and plunged to a low of 132.49. Not surprisingly, downward momentum remains strong and USD is likely to continue to weaken. The support levels are at 132.00 and 131.70. The downside risk is intact as long as USD does not move above 134.55 (‘strong resistance’ level was at 135.85 last Friday).
