USD/JPY is expected to accelerate losses on a breakdown of 131.50, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hout view: “Last Friday, we expected USD to trade in a broad range between 132.50 and 134.30. However, from a high of 133.83, USD plummeted to a low of 131.55 before rebounding. The rebound amid oversold conditions suggests USD is unlikely to weaken further. Today, USD is more likely to trade sideways between 131.70 and 133.20.”

Next 1-3 weeks: “We have expected USD to weaken since the start of last week. In our latest narrative from last Thursday (16 Mar, spot at 133.40), we indicated that while there is scope for USD to weaken further, the major support at 131.50 is unlikely to come into view so soon. On Friday, USD dropped to 131.55 before rebounding. Despite the relatively sharp drop, there is no significant increase in momentum. We continue to hold a negative USD view but it has to break and stay below 131.50 before a move towards the next support at 130.45 is likely. The downside risk is intact as long as USD does not move above 133.80 (‘strong resistance’ level previously at 135.10).”