Outlook on USD/JPY is mildly negative – UOB

USD/JPY’s stance remains tilted to the offered side, while losses could pick up pace iif 106.70 is cleared, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “While our expectation for USD ‘to continue to trade sideways’ was not the wrong, USD traded within a narrower range than anticipated (between 107.20 and 107.63). The price action offers no fresh clues and further consolidation would not be surprising. That said, the slightly weakened underlying tone suggests a lower trading range of 107.00/107.55.”

Next 1-3 weeks: “Last Thursday (11 Jun, spot at 107.05), we held the view that the outlook for USD ‘is mildly negative’. We indicated that USD has to ‘close below 106.70 before a sustained decline can be expected’. While USD subsequently dropped to 106.56, it did not close below 106.70. Despite the strong rebound last Friday, the risk for further USD weakness is still intact. Only a move above 108.00 (no change in ‘strong resistance’ level) would indicate the current mild downward pressure has eased. In other words, we continue to hold the same view from last Thursday.”