Further downside pressure in USD/JPY could see the 127.20 region revisited in the short-term horizon, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “Our expectation for ‘further USD weakness’ did not materialize as it dipped to 128.07 before rebounding. USD appears to have moved into a consolidation phase and is likely to trade sideways today, between 128.20 and 129.20.”

Next 1-3 weeks: “We continue to hold the same view as yesterday (02 Feb, spot at 128.40). As highlighted, the risk for USD has shifted to the downside toward 127.20. The downside risk is intact as long as the ‘strong resistance’ level at 129.90 (no change in level), is not breached