Strong momentum could outweigh oversold conditions, but any further decline in US Dollar (USD) may not reach 142.20 today. In the longer run, not only has the likelihood of a recovery dissipated, but the chance of USD declining to 142.20 has also increased, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
The likelihood of a recovery dissipated
24-HOUR VIEW: “We indicated yesterday that ‘the current price movements are likely part of a range trading phase, expected to be between 143.60 and 145.10.’ Our assessment was incorrect, as USD broke below 143.60, reaching a low of 143.16 before closing at 143.47. At the time of writing in the early Asian trade today, USD has fallen below 143.00. While strong downward momentum could outweigh oversold conditions, any further decline may not be able to reach 142.20 today (there is another support level at 142.50). On the upside, any recovery is likely to face strong resistance at 143.95, with minor resistance at 143.65.”
1-3 WEEKS VIEW: “In our most recent narrative from Monday (09 Jun, spot at 144.70), we indicated that the increase in upward momentum is not sufficient to indicate a sustained advance just yet.’ However, we pointed out that ‘if USD were to break and hold above 145.50, it could potentially trigger a strong recovery.’ Yesterday, USD broke below our ‘strong support’ level of 143.60. Not only has the likelihood of a recovery dissipated, but the chance of USD declining to 142.20 has also increased. However, should USD break above 144.40, it would suggest that it could trade in a broad range for a period of time.”
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