FX Strategists at UOB Group noted further gains in the pair could face some headwinds in the near term.
24-hour view: “Expectation for further gains yesterday was wrong as USD dropped sharply after touching a high of 106.97. The rapid decline appears to be running ahead of itself but another ‘down-leg’ towards 106.00 is not ruled out. At this stage, a clear break below this level seems unlikely (next support is at 105.70). Only the upside, only a move back above 106.80 would indicate that the immediate downward pressure has eased (minor resistance is at 106.55)”.
Next 1-3 weeks: “Despite overall positive outlook, USD has not been able to make much headway on the upside (USD eased off quickly after touching a high of 106.97 yesterday). The prospect of a recovery above 107.00 is still intact but has diminished. From here, a clear break below 106.00 would indicate that the current upward pressure has eased and that USD has moved back into a consolidation phase”.
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