The slight increase in downward momentum suggests US Dollar (USD) could test 7.1200; a sustained drop below this level appears unlikely. In the longer run, downward momentum is increasing, but USD must break and hold below 7.1200 before further declines are likely, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum is increasing

24-HOUR VIEW: "Yesterday, we expected USD to 'trade in a range between 7.1300 and 7.1450.' USD then rose to 7.1429, dropped to 7.1250 before closing at 7.1297 (-0.15%). The slight increase in downward momentum suggests USD could test 7.1200 today. A break below this level is not ruled out, but a sustained drop below this level appears unlikely. Resistance levels are at 7.1330 and 7.1400."

1-3 WEEKS VIEW: "In our most recent narrative from last Friday (10 Oct, spot at 7.1370), we indicated that USD 'is expected to trade in a range for now, most likely between 7.1200 and 7.1550.' Yesterday, USD dropped to a low of 7.1250. Downward momentum is increasing, but USD must break and hold below 7.1200 before further declines are likely. The likelihood of USD breaking clearly below 7.1200 will remain intact as long as the ‘strong resistance’ level, currently at 7.1460 is not breached. Looking ahead, the next support level below 7.1200 is 7.1130."