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FX Strategists at UOB Group suggested there is still scope for a test of 110.25 in the next weeks.

Key Quotes

24-hour view: “Expectation for sideway trading yesterday was wrong as USD cracked the 110.90 support and hit an overnight low of 110.65. Despite the relatively sharp drop, downward momentum is not as strong as preferred and while further USD weakness seems likely, any decline is likely ‘limited’ to a test of the 110.45 support. The next support is at the month-to-date low of 110.25 and this level could be just out of reach for now. Resistance is at 111.10 followed by 111.35″.

Next 1-3 weeks: “We have held the same view since Monday (23 Jul, spot at 111.20) wherein while the outlook for USD is deemed as neutral, “the immediate pressure has shifted to the downside” and a “test of the month-to-date low near 110.25 would not be surprising”. The relatively weak daily close in NY yesterday bodes well for our view and we continue to anticipate the 110.25 level to be ‘tested’. In view of the current lackluster downward momentum, the prospect for a sustained break below this level is not high at this stage. All in, only a break back above the ‘key resistance’ at 111.80 would indicate that the current downward pressure has eased (ideally, USD should stay below 111.50 from here)”.