Risk for US Dollar (USD) remains on the downside; oversold conditions suggest any decline may not reach 149.50. In the longer run, the odds of USD breaking clearly below 149.50 are increasing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Risk for USD remains on the downside

24-HOUR VIEW: "Two days ago, we held the view that USD 'could edge lower and test 151.20.' USD subsequently dropped more than expected to a low of 150.88. Yesterday, when USD was at 150.95, we indicated that 'the bias remains on the downside, and USD could decline toward 150.20.' However, we stated that 'based on the current momentum, a clear break below this level is unlikely.' Our assessments turned out to be correct, as USD dropped to a low of 150.20. While USD subsequently closed at 150.42 (-0.41%), it dropped below 150.20 in the early Asian trade today. We continue to see downside risk in USD today, but oversold conditions suggest any decline may not reach the major support at 149.50. To keep the momentum going, USD must not break above 150.95 (minor resistance is at 150.60)."

1-3 WEEKS VIEW: "Our most recent narrative was from Monday (13 Oct, spot at 152.05), in which we indicated that 'the current price movements are likely to early stages of a range-trading phase, probably between 149.50 and 153.00.' Yesterday, USD dropped to a low of 150.20. Downward momentum is starting to build, and the odds of USD breaking below 149.50 are increasing and will continue to increase provided that the ‘strong resistance’ at 151.70 is not breached in the next few days. Looking ahead, if USD breaks clearly below 149.50, it will likely threaten the next support level at 148.70."