Downward momentum continues to increase, and there is scope for US Dollar (USD) to test 7.1130. In the longer run, USD could drop to 7.1130; a clear break below this level will shift the focus to 7.1000, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Clear break below 7.1130 will shift the focus to 7.1000

24-HOUR VIEW: "We noted 'a slight increase in downward momentum' yesterday, and we were of the view that USD 'could test 7.1200.' We highlighted that 'a break below this level is not ruled out, but a sustained drop below this level appears unlikely.' Our expectations did not materialize, as USD edged to a low of 7.1217. Downward momentum continues to increase, and today, there is scope for USD to test the major support at 7.1130. Currently, it is unclear whether USD can break clearly below this level. Resistance levels are at 7.1280 and 7.1320."

1-3 WEEKS VIEW: "After expecting USD to trade in a range for a few days, we highlighted yesterday (16 Oct, spot at 7.1275) that 'downward momentum is increasing, but USD must break and hold below 7.1200 before further declines are likely.' We also indicated that '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.' USD subsequently dropped to a low of 7.1217. Although the support at 7.1200 has not been breached yet, the increasing downward momentum suggests USD could drop to 7.1130. A clear break below this level will shift the focus toward 7.1000. On the upside, the ‘strong resistance’ is now at 7.1400 instead of 7.1460."