The pair’s outlook remains neutral while a test of the 111.00 handle stays on the cards, according to FX Strategists at UOB Group.
24-hour view: “After making strong gains on Tuesday, USD traded in a surprisingly muted manner yesterday, registering a relatively narrow range of 39 pips (between 110.01 and 110.40). While the outlook for USD appears to be supportive, upward momentum is patchy at best and any advance is expected to be slow and grinding. From here, barring a move back below 110.00, we expect USD to grind higher and test the 110.75 resistance. At this stage, a clear break above this level is not expected (next resistance is at 111.00)”.
Next 1-3 weeks: “We have held the same view since last Thursday (10 May, spot at 110.75) wherein the immediate upward pressure could lead to a test of the major 110.45/50 resistance. After trading sideways for several days, USD finally managed to move higher and hit an overnight high of 110.45. At this stage, the prospect for a sustained move above 110.45/50 is not high but until there is break of the ‘key support’ at 109.65, we could not rule out further USD strength to 111.00”.