Momentum indicators are turning flat; US Dollar (USD) is expected to trade in a sideways range of 7.1750/7.1880. In the longer run, downward momentum is building; for a continued decline, USD must first close below 7.1700, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum is building
24-HOUR VIEW: “When USD was at 7.1800 in the early Asian trade yesterday, we indicated that ‘there is a chance for USD to test 7.1700, but based on the current momentum, a clear break below this level is unlikely.’ Although USD fell more than expected to 7.1690, it rebounded to close largely unchanged at 7.1810 (-0.02%). Momentum indicators are turning flat, and we expect USD to trade in a sideways range of 7.1750/7.1880 today.”
1-3 WEEKS VIEW: “We have expected USD to trade in a range since early this month. Yesterday (14 Aug, spot at 7.1800), we noted that ‘downward momentum is building.’ However, we pointed out that “for a continued decline, USD must first close below 7.1700.” USD subsequently dipped to a low of 7.1690 before rebounding to close at 7.1810 (-0.02%). There has been no further increase in downward momentum, but we will maintain our view as long as 7.1950 (no change in ‘strong resistance’ level) is not breached.”