In opinion of FX Strategists at UOB Group, the pair could breach the 111.50 level in the next weeks.
Key Quotes
24-hour view: “The swift and sharp recovery in USD yesterday was unexpected. However, the rebound appears to be running ahead of itself and while there is scope for upward extension, a break of the strong 112.70 resistance is not expected (minor resistance is at 112.50). Support is at 112.05 followed by 111.85. The 111.72 low seen early yesterday is not expected to come into the picture”.
Next 1-3 weeks: “Despite the strong rebound in USD yesterday (NY close of 112.25, +0.43%), we still chance that it could break below the strong 111.50 support (as highlighted yesterday, 16 Oct). Only a break of the ‘key resistance’ at 112.70 (no change in level) would indicate that the correction phase that started last Tuesday (09 Oct, spot at 113.10) has ended. That said, in order to the revitalize the current waning momentum, USD has to move and stay below 111.85 within these 1 to 2 days or the odds for a dip below 111.50 would diminish quickly. Looking forward, a break above the ‘key resistance’ would not change the overall neutral outlook but suggest USD would trade sideways at a higher range”.
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