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FX Strategists at UOB Group now see spot navigating a 110.70/111.50 range in the very near term.

Key Quotes

24-hour view: “While we expected the weakness in USD to be “limited to a test of the 110.45 support” yesterday, the relatively sharp bounce from a low of 110.58 was unexpected. The recent downward pressure has eased and USD has likely moved into a consolidation phase. In other words, USD is expected to trade sideways for today, likely within a 110.70/111.50 range”.

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)”.