USD/JPY seems to have moved into a consolidative phase, likely between 140.80 and 144.60 in the next weeks, comment FX Strategists at UOB Group Quek Ser Leang and Peter Chia.

Key Quotes

24-hour view: “We did not expect the sharp drop in USD to 141.49 and the subsequent strong bounce from the low (we were expecting USD to range trade). The strong rebound amidst oversold conditions suggests USD is unlikely to weaken further. For today, USD is more likely to consolidate and trade between 141.80 and 143.80.”

Next 1-3 weeks: “Last Friday, USD dropped sharply and cracked our ‘strong support’ level at 142.50. The breach of the ‘strong support’ indicates that the 2week USD rally (see annotations in the chart below) has ended. The current price actions are likely the early stages of a consolidation phase. After the recent outsized rally, USD is likely to consolidate within a broad range of 140.80/144.60.”