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FX Strategists at UOB Group remain bullish on the pair which keeps targeting the 114.70 area in the near term.

Key Quotes

24-hour view: “We highlighted yesterday “upward momentum is struggling” and added “USD is likely to consolidate and trade sideways”. In line with expectation, USD traded sideways even though the registered range of 113.50/114.01 was lower than our expected range of 113.70/114.15. The consolidation phase appears incomplete and further range trading is expected, albeit likely at lower range of 113.35/113.95″.

Next 1-3 weeks: “USD snapped its recent winning streak and closed lower yesterday (NY close of 113.66, -0.21%). The price action is not surprising as we highlighted yesterday (02 Oct, spot at 113.95) that “short-term indicators are at severely overbought levels and this could lead to a couple of days of consolidation first”. In other words, there is no change to our bullish USD view and we continue to anticipate a move to 114.70. Only a break of 113.15 would indicate that a short-term top is in place. The ‘stop-loss’ level at 113.15 is relatively close as USD could not ‘afford’ to retrace too much amidst the current overbought condition or the risk deep pullback would increase quickly. Note that we have held a ‘positive’ outlook in USD since 3 weeks ago (12 Sep, spot at 111.60) and upgraded the outlook to bullish yesterday (02 Oct)”.