USD/JPY outlook now bearish, could test 101.10 – UOB

A test of the 101.10 area remains on the cards for USD/JPY, according to analysts at UOB Group.

Key Quotes

“The BoJ stuck with the status quo and plans to compile a ‘comprehensive assessment’ for the next interest-rate decision on 21 September. Even though it kept the door open to further embark on its easing cycle, central bank officials appear to be in no rush to implement more non-standard measures as they continue to assess the impact of the negative-interest rate policy (NIRP), and BoJ Governor Haruhiko Kuroda may make additional attempts to buy more time especially as Prime Minister Shinzo Abe pledges to unveil a ‘bold’ fiscal stimulus package to assist the ailing economy”.

“The 3% plunge in USD last Friday has shifted the outlook to bearish. However, the rapid drop is clearly oversold but based on the current momentum, further extension to 101.10 would not be surprising (next support is at July’s low of 100.00/05). In order to maintain the current momentum, any rebound should not move back above 104.20”.