USD must not fall below 7.0500 – UOB Group

The US dollar (USD) could strengthen further, but it remains to be seen whether it can maintain the rapid pace of advance, note UOB Group FX analysts Quek Ser Leang and Peter Chia.

The level to monitor is 7.1200

24-HOUR OUTLOOK: “Last Friday, we expected the USD to rise, but we thought ‘any advance to 7.0710 is unlikely.’ Instead of rising, the USD rose to a high of 7.1036. The sudden and rapid rally appears to be overdone and the USD is unlikely to rise much further. Today, the USD is more likely to trade in a range, probably between 7.0700 and 7.1050.”

1-3 WEEKS: “The level to monitor is 7.1200. Last Thursday (October 3, point at 7.0380), I indicated that “recent USD weakness has stabilized.” I also indicated that “current price movements are likely part of a range trading phase, likely between 6.9900 and 7.0800”. On Friday, the USD rose above 7.0800 to reach 7.1036. The USD closed on a strong note, up 0.69% (7.0991), its second biggest one-day gain this year. While further USD strength is not out of the question, it remains to be seen whether it can maintain the rapid pace of advance. The level to monitor is 7.1200. To maintain the rapid momentum build, the USD must not fall below 7.0500.”