Sharp drop in USD has scope to extend. Any decline is likely part of a lower trading range of 150.50/155.00, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Bears to break below 150.50
24-HOUR VIEW: “Our view for USD to trade in a range was incorrect. USD traded in a volatile manner, rising to 155.21 before plunging to a low of 152.64. The sharp drop from the high has scope to extend, but given that conditions are approaching oversold levels, it is yet to be determined if any further decline can reach the major support at 151.30 (there is another support level at 151.90). Resistance levels are at 153.20 and 153.80.”
1-3 WEEKS VIEW: “We have expected USD to weaken since the middle of the month. In our most recent narrative from last Friday (26 Jul, spot at 153.50), we highlighted that ‘the weakness in USD appears to be stabilising.’ We added, ‘a breach of 155.00 would indicate USD is not declining further.’ Yesterday, USD rose briefly to 155.21 and then plummeted. Downward momentum is building again, albeit not significantly. From here, while there is room for USD to weaken, we held the view that any decline is likely part of a lower trading range of 150.50/155.00. In other words, a sustained drop below 150.50 seems unlikely for now.”
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