In view of FX Strategists at UOB Group, the pair’s outlook remains bullish in the near term.
24-hour view: “We highlighted yesterday that the major 110.95/00 resistance is “unlikely to yield so easily”. USD edged above this level and touched a high of 111.02 before reversing its gain. The decline extended lower early this morning to hit a low of 109.54. The down-move appears to be running ahead of itself and while a retest of the 109.50/55 support is not ruled out, a move below the next support at 109.20 is not expected. Resistance is at 110.20 followed by the stronger level at 110.55. The 111.02 high is acting as a very strong resistance and is not expected to be challenged for now”.
Next 1-3 weeks: “When we turned bullish USD 2 days ago (13 Sep, spot at 110.15), we held the view the strong USD rally is “running ahead of itself even though further extension to 110.95 would not be surprising”. USD edged above the major resistance of 110.95 yesterday, touching a high of 111.02. The subsequent sharp decline from the high hit a low of 109.54 early this morning (after news on North Korea), just a few pips above the stop-loss for our bullish view at 109.50. Upward momentum has been severely dented and while the bullish phase is deemed as intact until 109.50 is taken out, the 111.00/05 level is acting as a very strong resistance now and would be a difficult hurdle to overcome (next resistance is at 111.50). In the meanwhile, USD has likely moved into a short-term consolidation phase and could trade sideways for the next few days”.
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