USD/JPY: Any advance is likely to be part of a higher range of 147.20/148.25 - UOB Group

US Dollar (USD) could rebound further, but any advance is likely to be part of a higher range of 147.20/148.25. In the longer run, downward momentum is slowing; the likelihood of USD dropping further is diminishing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum is slowing

24-HOUR VIEW: "Last Friday, we expected USD to 'trade in a range of 146.60/147.70.' USD then dipped to 146.71 before staging a surprisingly strong rebound that reached a high of 147.90. While USD could rebound further, given that there has been no significant increase in momentum, any advance is likely to be part of higher range of 147.20/148.25. In other words, USD is unlikely to break clearly below 147.20 or above 148.25."

1-3 WEEKS VIEW: "In our most recent narrative from last Monday (04 Aug, spot at 147.25), we highlighted that 'the sharp drop in USD from last Friday has scope to extend.' However, we pointed out that 'any decline may not break below 145.80.' Since then, USD has not been able to make much headway to the downside. Downward momentum is slowing, and the likelihood of USD dropping further is diminishing. On the upside, a break above 148.20 (no change in 'strong resistance' level) would indicate USD is likely to trade in a range rather than dropping further."