Downward momentum begins to slow – UOB Group

The US Dollar (USD) is likely to trade in the 7.0010/7.0350 range. In the long term, the downward momentum is beginning to slow; if the USD breaks above 7.0350, it would suggest it could trade in a range for a while, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

Likely to trade in the 7.0010/7.0350 range

24-HOUR VIEW: “After the USD rebounded on Monday, we indicated yesterday (Tuesday) that the USD could continue to rally, but it does not appear to have enough momentum to threaten the strong resistance at 7.0350.” In line with our expectations, the USD bounced back, although it almost broke above 7.0350 (the high was 7.0350). Despite the progress, there has been no significant momentum building and rather than continuing higher, the USD is more likely to trade in the 7.0010/7.0350 range today.”

WEEKS 1-3: “After maintaining a negative position on the USD for more than a week (as annotated in the chart below), we highlighted yesterday (October 01, spot at 7.0100) that “downward momentum is starting to slow, and if the USD breaks above 7.0350 (the ‘strong resistance’ level), it would suggest that it could trade in a range for a while.” USD subsequently rose but did not break clear above 7.0350 (high was 7.0350). As our ‘strong resistance’ level has not been clearly breached, we will hold the same view for the time being, even though the probability of further USD weakness has decreased.”