Slight increase in upward momentum is likely to lead to a higher trading range of 7.1220/7.1340 rather than a sustained advance. In the longer run, US Dollar (USD) is facing mild upward pressure, and there is a chance for it to test 7.1370, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Slight increase in upward momentum

24-HOUR VIEW: "We indicated yesterday that 'there is scope for USD to edge above 7.1280'. However, we pointed out that it 'is unlikely to be able to maintain a foothold above this level'. USD subsequently rose to a high of 7.1290, closing at 7.1265 (+0.08%). The price movements have resulted in a slight increase in upward momentum, but this is likely to lead to a higher trading range of 7.1220/7.1340 rather than a sustained advance."

1-3 WEEKS VIEW: "The following are excerpts from our update yesterday (03 Nov, spot at 7.1210): 'Upward momentum is increasing, but it is not sufficient to indicate a sustained advance just yet. USD must close above 7.1280 before a move toward 7.1370 can be expected. The likelihood of USD closing above 7.1280 will remain intact as long as 7.1020 is not breached'. USD subsequently closed at 7.1265. Although we would prefer a more decisive closing above 7.1280, the slight increase in upward momentum suggests there is a chance for USD to test 7.1370. At this stage, it is unclear whether there is sufficient momentum for USD to break above this level. On the downside, if USD breaks below 7.1140 (‘strong support’ level was at 7.1020 yesterday), it would mean that the current mild upward pressure has eased."