FX Strategists at UOB Group noted the upside momentum in spot could be losing strength.
Key Quotes
24-hour view: “USD traded between 111.74 and 112.12 yesterday, narrower than our expected 111.70/112.20 consolidation range. The subsequent soft daily closing in NY (111.83) has weakened the underlying tone and from here, USD could edge lower even though a break of the strong 111.35 support seems unlikely (minor support is at 111.55). On the upside, we do not expect the 112.12 peak to come into the picture (at least for today). 112.00 is already a rather solid level”.
Next 1-3 weeks: “We have held the same view since last Wednesday (12 Sep, spot at 111.60) wherein “the probability for a test of last month’s 112.15 peak has increased”. We added last Friday (14 Sep, spot at 111.95) that “a move above 112.15 would not be surprising but at this stage, it is unclear if any up-move can be sustained”. USD subsequently touched a high of 112.16 during NY hours on Friday and while the USD up-move clearly lacks vigor, further strength cannot be ruled out. That said, we still have doubts on whether any further advance can be sustained. All in, the current low prospect for further strength to 112.60 would continue to improve as long as the ‘key support’ at 111.35 remains intact”.
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