According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, bets for a probable drop below 127.50 in USD/JPY keep diminishing.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the price actions are likely part of a consolidation’ and we expected USD to ‘trade sideways within a range of 128.70/129.65’. USD subsequently traded between 128.81 and 129.77. Further sideways trading would not be surprising, likely between 128.80 and 129.80.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (17 May, spot at 129.15). As highlighted, the chance for USD to move below 127.50 has diminished. However, only a breach of 129.90 would indicate that the downside risk has dissipated.”