Further strength in USD/JPY seems likely in the near term, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “While we highlighted last Friday that the bias for USD ‘is to the downside”, we indicated that ‘it remains to be seen if USD can break the strong support at 134.00’. USD came very close to taking out 134.00 as it dropped to a low of 134.05. The decline was, however, short-lived as USD lifted off and rocketed to a high of 136.51 in NY trade. The rapid rise appears to be overdone and USD is unlikely to advance much further. Today, USD is more likely to trade in a range, expected to be between 135.50 and 136.65.”

Next 1-3 weeks: “We have held a positive USD view for more than a week now. As USD struggles to reach our objective of 135.50, we highlighted last Friday (24 Feb, spot at 134.45) that the USD ‘strength appears to be coming to an end, but confirmation will come with a break of 134.00’.  We did not anticipate the subsequent volatile price actions as USD dropped sharply but briefly to 134.05 before soaring to take out 135.50 and another strong resistance level at 136.20 (high has been 136.51). The strong boost in upward momentum is likely to lead to further USD strength. The next resistance level to watch is at 137.90. On the downside, the ‘strong support’ level has moved higher to 135.00 from 134.00.”