While further downside in USD/JPY appears likely, a test of 131.50 seems not favoured in the near term, comment UOB Group Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “Yesterday, we expected USD to trade between 133.50 and 135.00. USD rose briefly to 135.11 in early London trade; plunged to 132.21 and then rebounded to close at 133.40 in NY (-0.61%). The volatile price action has resulted in a mixed outlook. Today, USD could continue to trade in a choppy manner, likely between 132.30 and 134.30.”

Next 1-3 weeks: “We indicated yesterday (15 Mar, spot at 134.30) that downward momentum has waned quickly but only a breach of 135.10 would indicate that USD is not weakening further. In London trade, USD rose briefly to 135.11 before plunging to 132.21. As there is no clear break of our ‘strong resistance’ level of 135.10, there is scope for USD to weaken further. That said, the major support at 131.50 is unlikely to come into view so soon.”