The pair is expected to keep navigating within the 110.60/112.20 band in the next weeks, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “Expectation for sideway trading was wrong USD dropped sharply and hit a low of 111.07 last Friday before ending the day on a soft note (NY close of 111.25). While downward momentum is not strong, the current soft patch in USD could extend lower even though last week’s low near 110.75 is unlikely to be threatened (110.95 is already quite a strong support). On the upside, only a break back above 111.55 would indicate that the current downward pressure has eased”.
Next 1-3 weeks: “We have held the same view since last Wednesday (01 Aug, spot at 111.80) that we are not convinced that the post-BOJ rally in USD is the start of a bullish phase. USD subsequently hit of 112.14 and has since surrendered a big part of its gains. We continue to view the current movement as part of a consolidation phase and expect USD to trade sideways, albeit likely at narrower range of 110.60/112.20 (from previous expectation of 110.60/112.50)”.
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