To trade in a range between 6.9700 and 7.0100 – UOB Group

The US Dollar (USD) is likely to trade in a range between 6.9700 and 7.0100. In the longer run, price action continues to suggest USD weakness, albeit likely at a slower pace; the levels to monitor are 6.9400 and 6.9200, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Markets to monitor support levels at 6.9400 and 6.9200

24-HOUR VIEW: “USD rebounded strongly on Wednesday. Yesterday (Thursday), we pointed out that ‘the rebound lacks momentum, and instead of continuing to advance, USD is more likely to trade in a 7.0180/7.0430 range.’ Instead of trading in a range, USD plummeted to a low of 6.9717, closing lower by a whopping 0.84% (6.9730). Inevitably, the outsized decline has resulted in oversold conditions, and USD is unlikely to weaken much further. Today, USD is more likely to trade in a range, probably between 6.9700 and 7.0100.”

1-3 WEEKS VIEW: “We turned negative in USD last Friday (20 Sep) when it was trading at 7.0700, indicating that it ‘is likely to trade with a downward bias towards 7.0500.’ After USD plunged, in our most recent narrative from two days ago (25 Sep, spot at 6.9990), we highlighted that ‘after the recent sharp drop, it is not unreasonable to expect further USD weakness, particularly when there are no significant support levels close by.’ We also pointed out that ‘the short-term levels to monitor are 6.9700 and 6.9400.’ Yesterday, USD sold off to a low of 6.9717. While the price action continues to suggest further USD weakness, severely oversold short-term conditions are likely to lead to a slower pace of decline. The levels to monitor are 6.9400 and 6.9200. We will continue to expect a lower USD provided that 7.0450 (‘strong resistance’ previously at 7.0600) is not breached.”