According to FX Strategists at UOB Group, USD/JPY faces extra losses on a close below 114.30.
24-hour view: “We highlighted yesterday that ‘the underlying tone still appears to be on the soft side and we continue to see chance for USD to dip below 115.00’. Instead of dipping below 115.00, USD plunged to a low of 114.36 before settling on a soft note at 114.63 (-0.56%). The rapid decline appears to be overdone but there is room for USD to test 114.30. The next support at 114.00 is not expected to come into the picture. On the upside, a breach of 115.10 (minor resistance is at 114.85) would indicate that the current weakness has stabilized.”
Next 1-3 weeks: “Two days ago (11 Jan, spot at 115.20), we held the view that the recent USD strength has come to an end and we expected USD to trade between 114.55 and 115.90. Yesterday (12 Jan), USD dropped below 114.55 (low of 114.36). Downward momentum is beginning to improve but USD has to close below 114.30 before a sustained decline can be expected. The prospect for USD to close below 114.30 would remain intact as long as USD does not move above 115.35 (‘strong resistance’ level) within these couple of days. Looking ahead, the next support below 114.30 is at 114.00.”