Extra weakness could drag USD/JPY to revisit the 127.20 region in the next few weeks, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “USD plummeted and extended its decline in early Asian trade. Strong downward momentum suggests further USD weakness even though last month’s low near 127.20 is unlikely to come into view today. There is minor support at 127.80. Resistance is at 128.75, a break of 129.30 would indicate the current weakness in USD has stabilized.”

Next 1-3 weeks: “On Tuesday (31 Jan, spot at 130.40), we highlighted that while upward momentum is showing signs of increasing, USD has to break above 131.15 before a sustained advance is likely. We added, ‘The chance of USD breaking above 131.15 will remain in place as long as USD stays above 129.30’. USD plunged below 129.30 yesterday and extended its decline today. The price actions have shifted the risk to the downside and USD is likely to weaken toward last month’s low near 127.20. The downside risk is intact as long as the ‘strong resistance’ level, currently at 129.90, is not breached.”