TOKYO (AFX-ASIA) - The dollar/yen eased in late morning as local equities remained firm despite softer share prices in the US overnight and with the yen recouping some of its losses overnight, dealers said. The dollar continues to test the upside but may be capped around upper 131 yen levels due to technical barriers, they said. Yen selling has been concentrated in overseas markets recently as foreign investors remain more negative on Japanese fundamentals, they said. "The main reason (for the dollar's recent rise) is foreigners are buying back dollar/yen as many were short and suffering," said Satoshi Tate, forex vice-president at UFJ Bank. Tate notes the belief, particularly in overseas markets, that the dollar has returned to its previous range of 130-135 yen and so the dollar will continue to push up to the middle of this range or beyond. However, he added that the situation may be more complicated technically. While the dollar traded in the 130-135 yen range from January, the "core range" for two and a half of those months was 132-135 yen, which has not yet been broken, he said. "The market may retrace to 132 yen but then it will struggle," Tate said. "Yesterday the dollar/yen exceeded the 50 pct retracement level -- at around 130.80 yen -- of its previous range of 126.36-135.19 yen. "The 131.82 yen level is the 61.8 pct Fibonacci retracement ... so many people want to sell at 131.50-80." Neither are recent fund flows straight forward. "People say Japanese investors tend to send money outside again" with the new fiscal year, Tate said. "There are some funds that will but on the other hand many fund managers are looking at the Japanese stockmarket. People say that foreigners have stopped buying Japanese stocks but the market is firm. "Japanese investors are pulling out of US bonds and bringing (funds) back," he said, as bond prices fall in expectation for rising US interest rates.