In opinion of FX Strategists at UOB Group, the pair stays neutral and eyes a probable visit to 112.14 in the short-term horizon.
Key Quotes
24-hour view: “We expected a higher USD yesterday but were of the view that “a break of the 111.30 resistance would come as a surprise”. USD hit an overnight high of 111.31 before extending its gains after NY close (at the time of writing, high has been 111.40). The rapid improvement in momentum suggests further USD strength but at this stage, we do not anticipate a break of 112.00 (111.80 is already a strong level). Support is at 111.05 but only a break of 110.80 would indicate that a short-term top is in place”.
Next 1-3 weeks: “The strong surge in USD yesterday was clearly unexpected. While the pressure has shifted quickly to the upside, the recent choppy price action suggests that it is unlikely USD has moved into a bullish phase. That said, the current rebound has scope to extend higher but at this stage, the month-to-date high of 112.14 is likely out of reach (112.00 is already a formidable resistance). On the downside, a dip below 110.50 (‘key support’) would indicate that the current short-term upward pressure has eased”.
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