A sustained break below 7.1700 is imminent – ​​UOB Group

The US dollar (USD) is likely to trade in a sideways range of 7.1700/7.1880. Bearish momentum is fading and the likelihood of the USD returning to the 7.0635 support level has decreased, note UOB Group FX strategists Quek Ser Leang and Peter Chia.

A move below 7.1700 is possible in the short term

24 HOUR VIEW: “Last Friday, the USD traded sideways before the close, largely unchanged. Yesterday (Monday), I opined that “a sideways trade looks likely, probably in a 7.1620/7.1900 range.” Our view of sideways trading was not wrong, even as the USD traded in a tight range of 7.1728/7.1854, again closing largely unchanged (7.1783, +0.05%). Price action provides no new clues. Today, we continue to expect the USD to trade sideways, likely in a 7.1700/7.1880 range.”

WEEKS 1-3: “We have been bearish on the USD since late last month (as annotated in the chart below). After the USD dropped sharply to 7.0636 and bounced back, in our update last Tuesday (06 Aug, spot at 7.1400), we highlighted that “while further USD weakness is not ruled out, the low near 7, 0635 is solid support now”. I added, “a breach of 7.2000 would mean the weakness has stabilized.” The USD has been trading sideways for the past few days and we noted yesterday (August 12, spot at 7.1770) that “downward momentum is fading and the likelihood of USD falling below 7.0635 has decreased.” There is no change in our vision.”