USD/JPY Shows Rangebound Movement In Short-Term, According To UOB
The USD/JPY will stay rangebound for the next few weeks, according to a senior economist at the UOB Group. They revealed the Dollar/Yen pair will trade between 143.50 and 146.20, which is actually quite a large range if we look at it from the short to medium-term perspective.
In the last 24 hours, the USD dropped lower, which sent the USD/JPY pair to 144.53 (low). This is an indication that the downward momentum in the pair has increased, but it is still not too much. Looking ahead, there's still enough room for the USD to go further down.
145.65 Remains An Important Resistance
But despite the growing bearish momentum, the chances of USD/JPY hitting the 143.50 support are very low. Not to mention that the 144.10 is also another support that comes before the 143.50. On the contrary, the resistance for the USD bulls is present at the 145.20 level and then the 145.65.
For the next 1 to 3 weeks, the forecast is that the momentum will remain low in the Dollar/Yen pair. In addition, there's a chance that the pair will rise higher and target the 147.50 resistance zone. However, the USD's current path is toward the downside, which suggests that rangebound price action is the most probable path for the pair.
So, based on the UOB forecast, the USD/JPY will likely trade in a 270 pips range with the low end at 143.50 and the upper limit at 146.20. And if we look at the economic situation in the USA and Japan, the situation is still not clear.
On one hand, the PMI data is weighing heavily on the Dollar and the bond yields. On the other hand, Japan is still showing no willingness to change its policies despite all the rumors and optimism. So, based on all of these, it appears that the chances of upside in the USD/JPY are higher than the downside.
In the next 1-2 days, the volatility in the pair may remain below average until we get what Jerome Powell has to say at the upcoming event.