USD/JPY could slip back to the 131.50 region amidst the ongoing downside momentum, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “While we expected USD to weaken yesterday, we did not anticipate the rapid downward acceleration as it plummeted to a low of 132.27 before rebounding (we were of the view that 133.00 was likely out of reach). The rapid rebound amid deeply oversold conditions suggests JPY is unlikely to weaken further. Today, JPY is more likely to trade in a range, expected to be between 132.70 and 134.50.”

Next 1-3 weeks: “We turned negative USD yesterday (13 Mar, spot at 134.40) but we held the view that any decline could be limited to 133.00. We did not anticipate the sharp selloff as USD plunged to 132.27 and then rebounded to close at 133.18 (-1.33%). The sharp increase in downward momentum suggests further USD weakness. The next level to watch is 131.50. On the upside, a breach of 135.10 (‘strong resistance’ level was at 136.40 yesterday) would indicate that USD is not weakening further.”