USD/JPY risks extra downside below 104.70 – UOB

In opinion of FX Strategists at UOB Group, USD/JPY is posed to extend the decline if 104.70 is cleared in the next weeks.

Key Quotes

24-hour view: “We highlighted last Friday that ‘the price actions offer no fresh clues and USD could continue to trade sideways for now, likely between 105.05 and 105.55’. USD traded sideways as expected, albeit within a narrower range of 105.17/105.44. The underlying tone has firmed somewhat and USD could edge higher but any advance is unlikely to break the solid resistance at 105.70 (minor resistance is at 105.55). On the downside, a break of 105.15 would indicate the current mild upward pressure has eased.”

Next 1-3 weeks: “There is not much to add to our latest narrative from last Thursday (15 Oct, spot at 105.20). As highlighted, while the bias is tilted to the downside, USD “has to close below 104.70 before a sustained decline can be expected”. This scenario remains intact as long as the ‘strong resistance’ at 105.70 is not taken out.”