USD/JPY consolidates as short-term range holds amid long-term downside risks

United Overseas Bank (UOB) strategist Quek Ser Leang noted that the USD/JPY pair has been fluctuating within a narrow range, trading between 156.94 and 158.21 before closing at 157.83. In the short term, intraday trading is expected to stay within 157.10-158.10.

Looking ahead at the 1-3 week horizon, Quek now anticipates a broader consolidation between 156.35 and 158.70, rather than deeper pullbacks. This shift comes after the pair briefly dipped to 156.35 but largely held within the range.

On a longer 1-3 month outlook, however, the strategist still warns of rapid downside momentum that could push the pair toward the January low at 152.08. This suggests a potential divergence between short-term stability and longer-term weakness.

In the most recent update from last Monday, when the spot rate was at 157.50, UOB highlighted that any decline should remain within the 156.00-158.70 range. The current price action has yet to provide fresh clues, indicating a period of consolidation.