The US Dollar (USD) is likely to trade in a range between 6.9720 and 6.9920. In the longer term, deep oversold conditions and dwindling momentum suggest that downside potential may be limited to a test of 6.9590, UOB Group forex analysts Kwek Ser Liang and Peter Chia noted.
Downside potential may be limited to testing 6.9590
24-hour view: “Yesterday, when the USD was at 6.9735, we noted that ‘there is scope for the USD to recover to 6.9805’. However, we noted that ‘a sustained rise above this level is unlikely’. The USD rebounded more than expected to 6.9915 before pulling back to close at 6.9827 (+0.17%). The bullish momentum has eased with the pullback, and today, we expect it to trade The US dollar is likely in a range between 6.9720 and 6.9920.”
1-3 week view: “We noted yesterday (05 Jan, spot at 6.9735) that “last month’s sharp decline in USD appears over-extended”. We also highlighted that “although there is no clear sign of stabilization yet, deep oversold conditions and waning downside momentum, suggest that downside potential may be limited to a test of 6.9590”. We will maintain the same view as long as 6.9950. (The “strong resistance” level has not been breached since yesterday.)
