FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang see USD/JPY facing extra downside pressure once 126.90 is cleared.

Key Quotes

24-hour view: “While we expected a softer USD yesterday, we were of the view that ‘any weakness is expected to face solid support at 126.90’. USD subsequently dropped to a low of 127.01 before rebounding. Downward pressure has eased and USD is likely to trade sideways for today, expected to be within a range of 127.20/128.20.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (26 Apr, spot at 127.60). As highlighted, the risk a deeper pullback in USD has increased. A clear break of 126.90 could lead to a pullback to 126.30. At this stage, the chance for a clear break of 126.90 is not high but it would remain intact as long as USD does not move above 128.50 (‘strong resistance’ level was at 128.80 yesterday.”