USD/JPY outlook shifted to bearish – UOB

According to FX strategists at UOB Group, USD/JPY’s outlook has shifted to bearish with a potential test of the mid-111.00s.

Key Quotes

“The anticipated USD weakness exceeded our expectation by a wide margin as the break of successive strong supports sent USD reeling to a low of 112.58. The weak daily closing suggests further downward pressure but the pace of any decline is likely to be slower and 112.00 may be out of reach for today”.

“We were of the view that the odds for further sustained weakness were limited but were proven wrong when USD plunged to an overnight low of 112.58. Despite being oversold, there is room for further extension to 111.50. That said, in terms of reward-to-risk ratio, the current level is clearly not attractive for those looking to sell as the stop-loss is much higher up at 114.50 (probably more prudent to wait for a rebound to 113.60)”.