Ella 
24-hour view: We did not expect USD/JPY to drop sharply to a low of 139.91 yesterday (we expected range-bound trading). Risks remain skewed to the downside despite the bounce off lows. However, any decline below 139.50 is unlikely to be significant as downside momentum is weak. Initial resistance is at 140.80, then at 141.10.
Next 1-3 weeks outlook: After surging to highs of 141.95 last week, we highlighted on Monday (July 24th, when prices were at 141.70) that USD/JPY could rise to 143.00. USD/JPY did not go any further higher and yesterday (July 26th, when the price was at 141.00), we noted that “the probability of USD/JPY going to 143.00 has decreased”. In New York trade, USD/JPY has broken below our “strong support” level at 140.00 (low to 139.91). A breach of a “strong support level” suggests that upward pressure has eased. The current price action could be part of a consolidation and we expect USD/JPY to trade within the 138.50/141.95 range for now.
