USD/JPY remains weak and could extend the decline to the 137.15 level in the next few weeks, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
Key Quotes
24-hour view: We expected USD to weaken yesterday. However, we indicated, “it remains to be seen if there is enough momentum to carry USD to the next major support at 139.00.” We did not expect USD to continue to accelerate lower as it plunged to 138.15. The outsized decline is severely oversold, but we are not ruling out further weakness. However, a clear break of 137.15 will come as a surprise today. There is another support at 138.00. Resistance is at 139.20, followed by 139.70.
Next 1-3 weeks: Yesterday (July 12, spot at 139.95), we highlighted that “USD’s sharp and rapid decline is accelerating.” We added, “The target for the next level is 139.00, followed by 138.45. While our view of downward acceleration proved correct, we did not expect the USD to break below both levels so quickly (NY trade low was 138.15). The USD weakness that started on Monday has widened drastically. Note that the USD has lost 4.3% in the last five days. That said, we are not ruling out further USD weakness until the ‘strong resistance’ at 140.50 (the 141.40 level yesterday) is breached. On the downside, the next level to watch is 137.15.
