The level to monitor is 7.1200 – UOB Group

The US dollar (USD) could strengthen further, but it remains to be seen whether it can maintain the rapid pace of advance. The level to watch is 7.1200, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

USD may strengthen further

24 HOUR VIEW: “Last Friday, the USD rose to a high of 7.1036. Yesterday (Monday), I indicated that the “sudden and rapid rally appears to be overdone, and the USD is unlikely to rise much further.” We expected the USD to “trade in a range between 7.0700 and 7.1050”. However, instead of trading in a range, the USD suddenly sold off to a low of 7.0583, closing at 7.0724 (-0.38%). This time, the sharp drop appears to be overdone and instead of continuing lower, the USD is expected to trade in the 7.0590/7.0800 range.”

WEEKS 1-3: “After the USD rallied last Friday, we indicated yesterday (Oct 07, spot at 7.0900) that ‘while a further USD rally is not out of the question, it remains to be seen whether it can maintain the rapid pace of advance.’ ‘ I also indicated that “the level to monitor is 7.1200 and to maintain the rapid increase in momentum, the USD must not fall below 7.0500”. Subsequently, the USD pulled back sharply and the momentum slowed to a certain extent. However, only a break of 7.0500 would indicate that the USD is not ready to climb to 7.1200.”