USD/JPY outlook shifted to neutral from bearish – UOB

FX Strategists at UOB Group shifted the outlook on the pair to neutral, expecting further rangebound between 109.20/111.05 in the near term.

Key Quotes

24-hour view: “Expectation for sideway-trading was clearly wrong as USD rose strongly to hit an overnight high 109.79 (before extending its gain after NY close). The strong 110.10 resistance was just breached at the time of writing and further up-move towards 110.50 would not be surprising. Support is at 109.80 but only a move back below 109.45 would indicate that the immediate upward pressure has eased”.

Next 1-3 weeks: “The stop-loss for our bearish view at 111.10 was just breached at the time of writing. The rapid and robust rebound after the breach of the major 108.80 support late last week was unexpected (low of 108.73 on 11 Aug). The outlook for this pair is deemed as neutral and USD is expected to trade within a broad 109.20/111.05 range for now. On a shorter-term note, solid support can be found at 109.45 while 110.50 is a strong resistance. Positioning wise, those who sold at 110.80 would have incurred a loss of -0.27%”.