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FX Strategists at UOB Group sees the upside momentum around the pair gaining further steam.

Key Quotes

24-hour view: “USD staged a surprisingly strong advance as it hit a 2-month high of 112.38 before ending the day on a solid note (NY close of 112.34). The up-move appears to be running ahead of itself but USD could test the strong 112.60 resistance first before easing off (next resistance is at 112.85). Support is at 112.05 but only a break of 111.80 would indicate that a short-term top is in place”.

Next 1-3 weeks: “We have held a ‘positive’ USD view since last Wednesday (12 Sep, spot at 111.60) where we highlighted “the probability for a test of last month’s 112.15 peak has increased”. While USD struggled to move clearly above 112.15, we indicated on Monday (17 Sep, spot at 112.00) that “USD strength lacks vigor, further up-move cannot be ruled out”. The sudden surge higher in USD yesterday came as a pleasant surprise as it closed on a solid note (NY close of 112.35, +0.35%). Upward momentum has improved considerably and the immediate risk is still clearly on the upside. From here, 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. All in, we continue to expect USD to stay supported in the coming days as long as the ‘key support’ at 111.55 is intact (level previously at 111.35)”.