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The pair’s near term outlook remains bullish and still targets the 114.70 area in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD traded between 113.53 and 114.09 last Friday, lower and narrower than our expected 113.60/114.20 consolidation range. The consolidation phase appears incomplete and we continue to expect sideway trading from here, likely within a 113.50/114.00 range”.

Next 1-3 weeks: “The bullish 114.70 ‘target’ that was first highlighted on Tuesday (02 Oct, spot at 113.95) remains elusive as USD staged a surprisingly sharp drop after touching a high of 114.54 during Asian hours yesterday. The rapid decline touched a low of 113.62 during NY hours, holding just above the ‘stop-loss’ for our bullish view at 113.50. The price action has clearly dented the recent strong upward momentum but confirmation of a short-term top is only upon a break of 113.50. That said, USD could not afford to hold below 114.70 for too long as a prolonged consolidation at these overbought levels would greatly increase the odds for a short-term top. All in, the price action over next few days should give us a clue on whether the current USD strength could extend further. Note that USD moved into a ‘positive’ phase more than 3 weeks ago, see update on 12 Sep (spot at 111.60) and we upgraded the outlook to bullish on Tuesday (02 Oct)”.