United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note that USD/SGD downside momentum has intensified after a sharp intraday swing, with firm support highlighted at 1.2875 and 1.2860. In the near term, the pair is expected to stay below 1.2910, while on a 1–3 week horizon a close under 1.2860 could trigger a deeper decline toward 1.2830, unless strong resistance at 1.2930 is broken.

Downside momentum targets key supports

"24-HOUR VIEW: On Wednesday, USD dropped to 1.2875 before snapping back up. When USD was at 1.2910 yesterday, we highlighted that “downward momentum has increased, but not significantly, and instead of continuing to decline, USD is more likely to consolidate between 1.2885 and 1.2930.” We underestimated the volatility as USD rose near 1.2930 with a high of 1.2928 before plummeting to a low of 1.2876. The sharp increase in momentum points to further downside, but any decline is expected to face firm support at 1.2860. Note that the 1.2875 level is expected to offer support as well. To keep the momentum going, USD must hold below 1.2910, with minor resistance at 1.2895."

"1-3 WEEKS VIEW: Yesterday (15 Jul, spot at 1.2910), we highlighted that “while there is scope for USD to weaken, given that there is no clear increase in downward momentum, any decline could be contained within a 1.2860/1.2955 range.” We did not quite expect USD to fall sharply to a low of 1.2876. Downward momentum is starting to build, and should USD close below 1.2860, it could trigger a deeper decline. On the upside, a breach of 1.2930 (‘strong resistance’ level) would mean that the risk of further downside has eased. Looking ahead, the next level to watch below 1.2860 is 1.2830."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)