USD/JPY could extend the downtrend to the 113.00 neighbourhood if 113.40 is cleared in the near term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Last Friday, we held the view that USD ‘is likely to break 113.70 but the next support at 113.40 is unlikely to come under threat’. Our view was not wrong as USD dropped to 113.68 before recovering. Downward pressure appears to have eased and USD is unlikely to weaken further. For today, USD is more likely to trade sideways between 113.60 and 114.20.”

Next 1-3 weeks: “There is not much to add to our update from last Friday (21 Jan, spot at 113.90). As highlighted, shorter-term downward momentum has improved but USD has to break 113.40 before a decline to 113.00 is likely. The chance for USD to break 113.40 is not high but it would increase further as long as USD does not move above 114.45 (no change in ‘strong resistance level’ from last Friday).”