FX Strategists at UOB Group noted that there is still scope for the pair to breach 111.50 in the next weeks.
Key Quotes
24-hour view: “Instead of trading sideways (as expected yesterday), USD edged below the 111.80 support and touched 111.64 before rebounding slightly. While the decline lacks momentum, a test of the major support at 111.50 is not ruled out. However, in view of the lackluster momentum, we do not expect a clear break below this level (next support is at 111.20). On the upside, resistance is at 112.05 followed by 112.30″.
Next 1-3 weeks: “We have held the same since last Thursday (11 Oct, spot at 112.15) wherein the current weakness in USD is viewed as a correction that has scope to extend to 111.50. We indicated, “a sustained decline below this level seems unlikely”. While the price action since then is in line with our expectation (USD dipped to a low 111.61 yesterday), the prospect for a break of 111.50 has increased. A clear break of this level would suggest a deeper pull-back towards 111.00. All in, USD is expected to stay under pressure until it can reclaim the current ‘key resistance’ at 112.70 (level previously at 113.00)”.
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