US Dollar (USD) could drop to 7.0980 before stabilisation is likely; a sustained drop below this level appears unlikely. In the longer run, rapid increase in momentum suggests a break of 7.1000 would not be surprising; the next support level to monitor is 7.0875, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
A sustained drop below 7.0980 appears unlikely
24-HOUR VIEW: “Our view of range-trading yesterday was incorrect, as USD dropped sharply to a low of 7.1036. The sharp and swift decline appears to be overdone, but with no sign of stabilisation just yet, USD could drop to 7.0980 before stabilisation is likely. A sustained drop below 7.0980 appears unlikely, and 7.0875 is also unlikely to come into view. Resistance is at 7.1090; a breach of 7.1125 would indicate that the decline is starting to stabilise.”
1-3 WEEKS VIEW: “We turned negative on USD early last week. In our most recent narrative from last Friday (12 Sep, spot at 7.1140), we highlighted that ‘there is room for USD to drop below 7.1100, but any decline is likely to be slow, and 7.1000 may not come into view so soon.’ Yesterday, Tuesday, USD staged a sudden sharp drop that reached a low of 7.1036. The rapid increase in momentum suggests that a break of 7.1000 would not be surprising. The next level to monitor is 7.0875. We will maintain our view as long as 7.1220 (‘strong resistance’ level previously at 7.1350) is not breached.”