The bearish momentum in USD/JPY has accelerated and it could now break below 106.25 in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for USD to trade sideways was incorrect as it closed on a weak note at 106.85 (-0.27%). USD extended its decline upon opening this morning and downward momentum has increased considerably. From here, barring a move back above 107.00, USD is expected to weaken further even though the support at 106.25 could be just out of reach.”

Next 1-3 weeks: “On Wednesday (22 Jul, spot at 106.85), we highlighted that “downward momentum has ticked up and from here, USD could drift lower but in view of the nascent build-up in momentum, any weakness may struggle to move below 106.25”. USD closed on a soft note yesterday (106.85, -0.27%) and extended its decline this morning. Downward momentum has improved quite a fair bit and from here, the risk of a break of 106.25 has increased. That said, there is another strong support at 106.00 and this level may not be easy to crack. Overall, only a move above 107.25 (‘strong resistance’ previously at 107.50) would indicate the current downward pressure has eased.”