FX Strategists at UOB Group expects the pair’s upside momentum to remain supported while above 111.35.

Key Quotes

24-hour view: “The sudden acceleration higher in USD that hit an overnight high of 111.99 was clearly not expected. Upward momentum has improved by considerably and from here, a move above the August’s peak of 112.14 would not surprise at all. However, the next resistance at 112.60 could be just out of reach for today. On the downside, we expect 111.35 to be strong enough to hold any intraday pull-back (minor support is at 111.60)”.

Next 1-3 weeks: “While we indicated on Wednesday (12 Sep, spot at 111.60) that the “the probability for a test of last month’s 112.15 peak has increased”, the solid gain made by USD yesterday was not exactly expected (the +0.60% gain is the largest 1-day rise in 3 weeks). After the solid advance, a move above 112.15 would not be surprising but at this stage, it is unclear if any up-move can be sustained. However, as long as USD can hold above 111.35 within the next couple of days (‘key support’ previously at 110.85), the prospect for further USD strength to 112.60 would continue to improve”.

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