Japanese Yen: Bullish bias within broad range against US Dollar – UOB

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann highlight that USD/JPY dropped sharply to around 158.00, eroding the previous upside bias. They now expect the pair to edge lower, but see any decline as contained within a wider 156.60–159.60 range in coming days, with intraday moves likely limited to 157.70–158.70 rather than a sustained bearish trend.

Dollar-Yen slide seen limited in scope

"24-HOUR VIEW: Yesterday, USD plunged 0.91%, closing at 158.16. The sharp decline appears overdone, and while USD could drop below 158.00, any decline is likely part of a lower range of 157.70/158.70 rather than a sustained decline. In other words, USD is unlikely to break clearly below 157.70."

"1-3 WEEKS VIEW: We have held the view that “the bias for USD is on the upside” since a week ago. In our most recent narrative from last Friday (14 Aug, spot at 159.40), we highlighted the following: “While USD has been unable to make much headway on the upside, the underlying tone still appears to be firm, and the bias remains tilted to the upside. That said, a narrower range of 158.00/160.20 is likely enough to contain the price movements for now.” Yesterday, in a sudden move, USD plunged and reached a low of 158.03. Although 158.00 has not been breached yet, the upside bias has faded. The downward momentum is starting to build, but it is insufficient for a sustained decline. Overall, we expect USD to edge lower, but any decline should be contained within a 156.60/159.60 range."