USD/JPY: Decline is likely limited to a test of 154.35 – UOB Group

The US Dollar (USD) could pull back further; any decline is likely limited to a test of 154.35. In the longer run, USD is expected to trade in a range, likely between 153.30 and 156.50, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD is expected to trade in a range

24-HOUR VIEW: “We did not anticipate the sharp rise in USD that reached 155.88 (we were expecting range trading). USD pulled back from the high, closing at 155.43 (+0.50%). The pullback in deep overbought conditions suggests that USD is unlikely to rise further. Today, it could pull back further, but given that downward momentum is not strong, any decline is likely limited to a test of 154.35. The major support at 153.30 is not expected to come into view. On the upside, resistance levels are at 155.50 and 155.90.”

1-3 WEEKS VIEW: “On Monday (18 Nov, spot at 154.20), we highlighted that ‘The current price action is likely part of a pullback that could extend to 153.20.’ We also highlighted that ‘should USD break above 155.80 (‘strong resistance’ level), it would mean that the current downward pressure has eased.’ USD fell to a low of 153.28 on Tuesday. Yesterday, it rose to a high of 155.88. The breach of our ‘strong resistance’ level at 155.80 indicates downward momentum has eased. From here, we expect USD to trade in a broad range, likely between 153.30 and 156.50.”