Further downside in USD/JPY should meet decent contention around the 133.00 region, note Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “We highlighted last Friday that while there is scope for USD to weaken, any decline is viewed as a lower trading range of 135.50/137.00. However, USD sold off sharply before extending its drop in Asian trade. The sharp drop appears to be overdone but with no signs of stabilization just yet, USD could weaken further. That said, the major support at 133.00 is likely out of reach today. On the upside, a breach of 135.50 (minor resistance is at 135.00) would indicate that the weakness in USD has stabilized.”

Next 1-3 weeks: “Last Friday (10 Mar, spot at 136.40), we held the view that USD ‘appears to have entered a consolidation phase’ and we expected it to trade within a range of 135.00/138.00. We did not anticipate the sharp selloff to 134.10. The sharp drop appears to be running ahead of itself but there is scope for USD to weaken further. At this stage, we expect any decline could be limited to 133.00. Overall, only a breach of the ‘strong resistance’ level at 136.40 would indicate that USD is not weakening further.”