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FX Strategists at UOB Group remain bullish on the pair and expect it to test the 114.70 area in the near term.

Key Quotes

24-hour view: “The consolidation phase ended sooner than expected as USD blast past several strong resistance levels with ease and hit a high of 114.54. While the rapid rally is moving into overbought territory, there is no sign of weakness just yet and there is scope for USD to move above the next strong resistance at 114.70. For today, the prospect for a clear break of 115.00 is not that high. Support is at 114.20 followed by 114.00″.

Next 1-3 weeks: “USD snapped its recent winning streak and closed lower yesterday (NY close of 113.66, -0.21%). The price action is not surprising as we highlighted yesterday (02 Oct, spot at 113.95) that “short-term indicators are at severely overbought levels and this could lead to a couple of days of consolidation first”. In other words, there is no change to our bullish USD view and we continue to anticipate a move to 114.70. Only a break of 113.15 would indicate that a short-term top is in place. The ‘stop-loss’ level at 113.15 is relatively close as USD could not ‘afford’ to retrace too much amidst the current overbought condition or the risk deep pullback would increase quickly. Note that we have held a ‘positive’ outlook in USD since 3 weeks ago (12 Sep, spot at 111.60) and upgraded the outlook to bullish yesterday (02 Oct)”.