Extra downside could force USD/JPY to retest the 135.50 zone 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 soared briefly to 139.89 in NY trade before plunging to 137.64. USD fell further in early Asian trade, and the strong downward momentum is likely to continue. The support levels to monitor are at 136.40 and 135.50. The latter level is unlikely to come into view today. On the upside, 138.05 is a rather solid resistance now (minor resistance is at 137.80).”

Next 1-3 weeks: “In our most recent narrative from Monday (29 Nov, spot at 138.75), we indicated that further USD weakness is not ruled out but the chance of a drop to the next support at 137.00 is not high. In NY trade, USD popped briefly above our ‘strong resistance’ level at 139.60 (high of 139.89) before plummeting. The strong surge in momentum is likely to lead to further USD weakness to 136.40, as low as 135.50. The ‘strong resistance’ level is at 138.55.”