US Dollar (USD) is likely to trade in a range between 6.9720 and 6.9920. In the longer run, deeply oversold conditions and waning momentum suggest the downside potential could be limited to a test of 6.9590, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downside potential might be limited to a test of 6.9590

24-HOUR VIEW: "Yesterday, when USD was at 6.9735, we indicated that 'there is scope for USD to recover to 6.9805'. However, we pointed out that 'a continued rise above this level is unlikely'. USD rebounded more than expected to 6.9915 before pulling back to close at 6.9827 (+0.17%). Upward momentum has eased with the pullback, and today, we expect USD to trade in a range, most likely between 6.9720 and 6.9920."

1-3 WEEKS VIEW: "We noted yesterday (05 Jan, spot at 6.9735) that 'the sharp decline in USD last month appears to be overextended'. We also highlighted that 'although there is no clear sign of stabilization yet, deeply oversold conditions and waning downward momentum, suggests the downside potential could be limited to a test of 6.9590'. We will maintain the same view as long as 6.9950 (no change in ‘strong resistance’ level from yesterday) is not breached."