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Spot remains neutral in the near term and it could advance to the 112.00 handle and above in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The recent strength in USD fizzled out sooner than expected as it dropped back during NY hours and hit a low of 111.11. While downward momentum is not strong, USD could continue to grind lower towards 110.85. This is a strong short-term level and is expected to offer solid support. On the upside, only a move back above 111.65 would indicate that the current mild downward pressure has eased (minor resistance is at 111.45)”.

Next 1-3 weeks: “While the rapid pace and extent of the rebound from last week’s 110.37 low was surprising, we are not convinced that USD is ready for a directional move. However, short-term underlying tone has clearly improved and the immediate pressure is on the upside and the probability for a test of last month’s peak near 112.15 has increased. At this stage, we do not anticipate a sustained move above this level. On the downside, only a break of 110.85 would indicate that the current mild upward pressure has eased”.

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