USD/JPY could slip back to the 106.20 region – UOB

USD/JPY is expected to trade with a downward bias towards the 106.20 region in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Despite staging a rapid rebound from a low of 106.62 last Friday, it is too early to expect a major recovery. From here, USD is more likely to consolidate and trade between 106.65 and 107.20.”

Next 1-3 weeks: “In our previous narrative from last Tuesday (07 Jul, spot at 107.35), we held the view that USD 'could trade sideways between 106.80 and 108.05 for a period'. USD dropped below the bottom of the expected range and touched 106.62 last Friday before settling on a soft note at 106.89 (-0.28%). Downward momentum has picked up and from here, USD is expected to trade with a downward bias towards 106.25. At this stage, the prospect a break of last month’s low near 106.05 is not high. On the upside, a break of 107.45 (‘strong resistance’ level) would indicate that the current downward pressure has eased.”