In view of FX Strategists at UOB Group, further upside is still likely in the pair in the near term, although a strong hurdle emerges at 112.80.
24-hour view: “USD tested the bottom of our expected 112.00/112.50 consolidation range before surging higher and hit a high of 112.58. The strong rally from a low of 112.01 appears to be running ahead of itself but a move above the overnight high of would not be surprising. However, a sustained break above 112.80 seems unlikely (next resistance is at the July’s peak near 113.15). On the downside, a break below 112.20 is enough to indicate that a temporary top is in place (next support is at 112.00)”.
Next 1-3 weeks: “We highlighted on Wednesday (19 Sep, spot at 112.30) that “upward momentum has improved” and “risk is still clearly on the upside”. We added, “a move above 112.60 would not be surprising but there is another strong resistance level at 112.80 and this level may not yield so easily”. USD came close to 112.60 as it hit an overnight high of 112.58. Despite the generally positive price action, we continue to see solid resistance at 112.80 and while an intraday move above this level would not be surprising, we doubt USD can maintain a toehold above this level. Note that there is another very strong resistance at 113.15 (July’s peak). All in, the current positive outlook for USD is deemed as intact until the ‘key support’ at 111.75 is taken out (level previously at 111.55)”.