Tentative increase in upward momentum suggests US Dollar (USD) could test 6.9950. In the longer run, outlook for USD is neutral now; it is likely to trade between 6.9660 and 7.0160, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Outlook for USD is neutral now

24-HOUR VIEW: "We expected USD to 'trade in a range between 6.9720 and 6.9880' yesterday. However, after dipping to a low of 6.9790, USD edged to a high of 6.9925. There has been a tentative increase in upward momentum, and USD could test the resistance at 6.9950. A break above this level is not ruled out, but given the tentative momentum, any further advance is unlikely to reach 7.0050. Support levels are at 6.9850 and 6.9800."

1-3 WEEKS VIEW: "Our most recent narrative was from Monday (05 Jan, spot at 6.9735), in which we indicated 'the sharp decline in USD last month appears to be overextended'. We also indicated that 'although there is no clear sign of stabilization yet, deeply oversold conditions and waning downward momentum, suggest the downside potential could be limited to a test of 6.9590'. Yesterday, USD edged to a high of 6.9925. Although our ‘strong resistance’ level at 6.9950 has not been breached yet, downward momentum has more or less eased. In other words, the outlook for USD is neutral now, and we expect it to trade between 6.9660 and 7.0160."