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The pair’s outlook has shifted to bullish and is now looking to test the 113.40/75 band in the near term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The anticipated USD strength exceeded our expectation by easily taking out the 112.40/45 resistance (high of 112.62). The strong daily closing in NY coupled with the still very strong momentum suggests that further USD strength even though overbought conditions could limit the gains to 112.95/00 (next resistance is at 113.40). On the downside, 112.00 is expected to be strong enough to hold any intraday pull-back (minor support is at 112.30)”.

Next 1-3 weeks: “We shifted from a neutral to bullish stance yesterday (12 Jul, 112.00) and highlighted that in order to maintain the current ‘impulsive momentum’, USD has to “continue to power higher in the next few days”. The subsequent price action is line with our expectation as USD extended its gain and hit an overnight high of 112.62 before settling at 112.55 (registering the largest 2-day gain since Sep last year, +1.42%). The strong closing bodes well for our bullish view and we continue to anticipate further USD strength to the immediate ‘target’ of 113.40 (year-to-date high). Looking further ahead, if there is a break above this level, the focus would then shift to 113.75. The next significant resistance is at 114.72 and this level is likely out of reach, at least for the next couple of weeks. On the downside, ‘stoploss’ is adjusted higher to 111.50 from 111.30. Shorter-term, 111.85/00 is already a rather strong support zone”.