Bears may try to break below 7.1500 – UOB Group

A further advance in the US dollar (USD) looks likely but is unlikely to reach 7.2050, let alone 7.2300, note UOB Group’s Quek Ser Leang and Lee Sue Ann.

Fall below 7.1500 is very possible

24 HOURS: “After USD dropped to 7.1317 in two days and bounced back, I indicated yesterday that ‘the decline appears to have stabilized.’ We expected the USD to “trade in the 7.1350/7.1630 range”. Instead of trading in a range, the USD rose in NY trade, hitting a high of 7.1843. The rapid growth has picked up and USD upside looks likely. However, resistance at 7.2050 is probably impossible for now (minor resistance is at 7.1950). To keep the upside on pace, the USD needs to stay above 7.1650 with minor support at 7.1750.”

WEEKS 1-3: “We have had a negative view on the USD since the end of last month. In the most recent story from two days ago (August 14 at 7.1500), we indicated that “while downside momentum has been boosted, it is unclear at this point whether it is enough for the USD to drop below 7.0635.” I added that “the bias remains down as long as 7.1850 (the ‘strong resistance’ level”) is not breached. Yesterday, the USD rose to a high of 7.1843. While our “strong resistance” level of 7.1850 was not clearly breached, the downward momentum faded. Not only has USD weakness stabilized, but upside momentum is also building. From here, we expect the USD to move higher, but with the upside momentum just starting to build, any advance to 7.2300 is unlikely. On the downside, should the USD break below 7.1500, it would suggest the momentum build-up has eased.”