USD/JPY is now expected to navigate the 130.50-134.50 range in the next weeks, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted last Friday that USD ‘could continue to rise but it is unlikely to challenge the major resistance at 135.00’. While our view was not wrong as USD rose to 134.77, the sharp selloff from the high came as a surprise (USD touched a low of 131.98 in late NY). While deep in oversold territory, the weakness in USD could extend to 131.50 first before stabilization is likely. The next support at 131.00 is unlikely to come into view. On the upside, a break of 133.00 (minor resistance is at 132.55) would indicate the weakness in USD has stabilized.”

Next 1-3 weeks: “Last Friday (06 Jan, spot at 133.50), we indicated that USD is likely in the early stages of a corrective rebound that could extend to 135.00. USD subsequently rose to 134.77 before dropping sharply to a low of 131.98. While our ‘strong support’ level at 131.50 is not breached, the rapid loss in momentum suggests that USD is likely to trade within a broad range of 130.50 and 134.50 instead of rebounding further.”