There is a chance for US Dollar (USD) to test 7.1700; a clear break below this level is unlikely. In the longer run, downward momentum is building; for a continued decline, USD must first close below 7.1700, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum is building

24-HOUR VIEW: "In the early Asian session yesterday, we detected 'a slight increase in downward momentum.' We expected USD to 'edge lower to 7.1780,' but we pointed out that 'given the mild downward pressure, any further decline is unlikely to threaten the support at 7.1700.' We were not wrong, as USD fell to a low of 7.1758. Although there has been no significant increase in downward momentum, there is a chance for USD to test 7.1700 today. Based on the current momentum, a clear break below this level is unlikely. Resistance levels are at 7.1850 and 7.1900."

1-3 WEEKS VIEW: "In our update from Monday (11 Aug, spot at 7.1880), we highlighted that 'while we continue to expect range trading, a narrower range of 7.1700/7.2100 is likely enough to contain the price movements for now.' Yesterday, USD dropped to a low of 7.1758. Downward momentum is building, but for a continued decline, USD must first close below 7.1700. The probability of USD closing below 7.1700 will increase from here as long as 7.1950 (‘strong resistance’ level) holds. Looking ahead, if USD closes below 7.1700, the next level to watch is 7.1580."