Considering the ongoing price action, USD/JPY could face extra weakness in the next few weeks, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We expected USD to “trade sideways within a range of 138.20/139.30” yesterday. However, USD traded within a wider range than expected (137.86/139.35) before settling at 138.68 (-0.19%). Momentum indicators are “flattish” and we continue to expect USD to trade sideways, expected to be within a range of 138.00/139.40.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (29 Nov, spot at 138.75). As indicated, while further USD weakness is not ruled out, downward momentum has waned and this combined with oversold conditions suggests the chance of USD dropping to the next support at 137.00 is not high. Overall, only a break of 139.60 (no change in ‘strong resistance’ level) would indicate that USD is not weakening further.”