Risk for US Dollar (USD) remains on the downside, but it is unclear now if there is sufficient momentum for a break of the y-t-d low of 7.0860, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Risk for USD remains on the downside

24-HOUR VIEW: "We indicated yesterday that USD 'may drop below 7.1130'. We also indicated that 'it is unclear for now whether USD can maintain a foothold below this level'. USD subsequently dropped to a low of 7.1029, recovering to close at 7.1095, down by 0.23%, its biggest oneday drop in two months. While conditions are oversold, the decline has not stabilised. Today, USD could dip below 7.1000 before a more sustained recovery can be expected. The year-to-date low of 7.0860 is likely out of reach for now. Resistance is at 7.1150, followed by 7.1200."

1-3 WEEKS VIEW: "In our most recent narrative from 17 Oct (spot at 7.1220), we indicated that USD 'could drop to 7.1130'. We added, 'a clear break below this level will shift the focus to 7.1000'. Yesterday, USD dropped to a low of 7.1029. The increasing downward momentum continues to indicate downside risk. That said, it is unclear for now if there is sufficient momentum for USD to break the year-to-date low of 7.0860. Overall, only a breach of 7.1280 (‘strong resistance’ level was at 7.1310 yesterday) would indicate the current downward pressure has eased."