USD/JPY: Solid support still seen at 112.50 – UOB

Prospects of further decline in USD/JPY are expected to meet support in the mid-112.00s in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘could drift lower but a break of the major support at 112.50 is unlikely’. We added, ‘there is a minor support is at 112.65’. USD subsequently dipped to 112.64 before rebounding. Momentum indicators are turning neutral and USD is likely to trade sideways for today, expected to be within a range of 112.80/113.40.”

Next 1-3 weeks: “There is not much to add to our update from Wednesday (01 Dec, spot at 113.40). We continue to hold the same view that USD could weaken further but 112.50 is expected to offer solid support.  On the upside, a breach of the ‘strong resistance’ level at 113.80 (level was at 114.00 yesterday) would indicate that USD is not ready to move below 112.50. Looking ahead, a clear break of 112.50 would shift the focus to 112.00.”