USD/JPY: Likely to trade in a range between 146.80 and 147.85 – UOB Group
US Dollar (USD) is likely to trade in a range between 146.80 and 147.85. In the longer run, outlook is mixed; USD could trade in a range between 146.40 and 148.40, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Outlook for USD/JPY is mixed
24-HOUR VIEW: "Subsequent to the sharp rise in USD that reached a high of 148.40 last Thursday, we highlighted on Friday (when USD was at 148.35) that 'there is a clear increase in upward momentum.' We held the view that 'there is a chance for USD to test 148.80.' However, we noted that 'given that conditions are quickly reaching overbought levels, a sustained break above this level seems unlikely.' While we were not wrong, as USD rose to a high of 148.77, we did not expect USD to plunge to a low of 146.54 during the NY session and then rebounded. The rebound from oversold conditions indicates that instead of continuing to decline, USD is more likely to trade in a range between 146.80 and 147.85."
1-3 WEEKS VIEW: "We turned positive on USD last Friday (22 August, spot at 148.35). We pointed out that the 'rapid increase in momentum indicates USD could rise above 148.80, potentially reaching 149.20.' Our revision was ill-timed, as USD dropped quickly and broke below our ‘strong support’ level of 147.35. The recent sharp price swings, which failed to result in a sustained directional move, have led to a mixed outlook for USD. For the time being, USD could trade in a range between 146.40 and 148.40."
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