Further uptick in upward momentum may lead to US Dollar (USD) edging higher; any advance is unlikely to threaten the 7.1220 level. In the longer run, USD must break and hold below 7.0860 before further downside is likely, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Below 7.0860, further downside is likely

24-HOUR VIEW: "We noted 'a slight uptick in upward momentum' yesterday, but we were of the view that 'this is likely to lead to USD trading in a higher range of 7.0930/7.1130 rather than a sustained advance.' USD subsequently traded between 7.0995 and 7.1130, closing slightly higher at 7.1083 (+0.09%). There has been a further uptick in upward momentum. Today, USD may edge higher, but based on the current momentum, any advance is unlikely to threaten the strong resistance at 7.1220. Support levels are at 7.1040 and 7.0985."

1-3 WEEKS VIEW: "We have held a negative USD stance since early last week (see annotations in the chart below). On Wednesday, USD fell below our previous technical target of 7.0875 (low of 7.0860) and then rebounded strongly. Yesterday (18 Sep, spot at 7.1030), we highlighted the following: 'While USD could still weaken, the rebound from 7.0860 suggests that this level is acting as a pivotal support — a kind of ‘reverse highwater mark’ — and only a break and close below it would indicate that further downside is likely. The likelihood of USD breaking clearly below 7.0860 will remain intact as long as 7.1220 (no change in ‘strong resistance’ level) is not breached.' We continue to hold the same, but it appears increasingly likely that 7.0860 could serve as a near-term low."