There is a chance for US Dollar (USD) to test the major support at 7.1200 before a more sizeable recovery is likely. In the longer run, downward bias is building, but USD must first close below 7.1100 before a sustained decline can be expected, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downward bias is buildin

24-HOUR VIEW: "After dropping sharply to a low of 7.1218 in the NY session last Friday, USD recovered to close slightly lower at 7.1266 (-0.13%). Despite the decline, there has been no significant increase in downward momentum. That said, there is a chance for USD to test the major support at 7.1200 before a more sizeable recovery is likely. USD is unlikely to break clearly below 7.1200. On the upside, if USD breaks above 7.1375 (minor resistance is at 7.1340), it would mean that USD has likely entered a range-trading phase."

1-3 WEEKS VIEW: "In our latest narrative from last Wednesday (03 Sep, spot at 7.1400), we stated that 'the current price movements are likely part of a range trading phase between 7.1200 and 7.1650.' USD traded within the range, but last Friday, it fell sharply to a low of 7.1218. There has been an increase in downward momentum, but not significantly. Overall, while the downward bias is building, USD must first close below 7.1100 before a sustained decline can be expected. The odds of USD closing below 7.1100 are not high for now, but they will remain intact as long as 7.1500 is not breached."