USD/JPY faces the next support at 105.50 – UOB

Further downside in USD/JPY should meet the next key support in the mid-105.00s ahead of the post-flash crash low at 104.96, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD surprised with a follow-through down move on Fri touching a low of 106.49. There was hardly any substantial rebound intraday, indicating that the bears are still very much in control. Today, USD is likely to maintain its ‘downside bias’ with supports at 106.20 and 106.00. Resistances are expected at 107.00 and 107.40”.

Next 1-3 weeks: “In our previous report (2-Aug, spot 107.45), we cited a further risk of markets ‘repositioning for a lower USD/JPY going forward’ and that a NY close below 107.00 would warrant a ‘negative phase’ for USD (closing price on Fri: 106.58). Here, price action is likely to stay volatile and should USD drops below 106.00, key support at 105.50 and Jan’s flash crash low of 104.96 would quickly come into focus. On the upside, resistance is expected at 107.10 and only a recovery above 107.90 would indicate that downside pressures on the USD have eased”.