The prospects for USD/JPY continue to signal a probable drop to the 126.35 levels in the next few weeks, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We expected USD to ‘trade within a range of 127.85/129.05’ yesterday. USD subsequently traded between 127.98 and 129.13 before settling at 128.13 (-0.32%). The price actions still appear to be consolidative and we expect USD to trade between 127.40 and 129.40 today.”

Next 1-3 weeks: “There is not much to add to our update from Monday (16 Jan, spot at 128.00). As highlighted, the risk for USD remains on the downside, and the next level to watch is 126.35. On the upside, a breach of 130.05 (no change in ‘strong resistance’ level) would indicate that USD is not weakening further.”