Recently, the experts from the UOB Group have come up with their latest forecast for the USD/JPY pair. According to them, the current price action suggests that more weakness is ahead for the USD/JPY within the next few weeks.
For the short term, the expectation was that the USD would continue to trade sideways in a narrow range of 138.20 to 139.30 (around 110 pips). However, the actual range turned out to be from 137.86 to 139.35. Similarly, the momentum indicators remained flat, which was a sign that there was no clear direction in this pair.
So, for now, the USD/JPY is expected to continue trading in sideways action with the range of 138.00 to 139.40 (140 pips).
And for the price action in the next few weeks (1 to 3), the general consensus is there will not be much action for the pair. However, we all know that it will be too soon to rule out any USD weakness, but it seems that the downward momentum in the USD/JPY has slowed down. This is a sign that the USD weakness is not a major factor for this player for now.
Looking ahead, the next important support for USD/JPY is 137.00. If this level breaks, the next important support will be 139.60, and if the price breaks below that level, it would be a sign that the USD is en route to further weakness.
Since we are discussing the USD/JPY, it would not be wise to rule out the fundamental overview as well. In Japan, there are no signs of any hawkish policy as the country remains on the same track. But in the United States of America, the Fed is very aggressive and continues to drop new rate hikes every few months.
This is the reason why the USD continues to gain against the JPY and other major currencies. However, this stronger USD has ended up hurting the US stock market, as all major stocks are down.