While deeply oversold, further USD weakness is not ruled out; next support level is at 142.50. In the longer run, renewed momentum suggests USD is likely to continue to decline; mid-term support levels are at 142.50 and 139.55, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD is likely to continue to decline
24-HOUR VIEW: “Following the volatile price action on Wednesday, we indicated yesterday, ‘Thursday that ‘after the sharp swings, the outlook is mixed.’ We expected USD to ‘trade in a range of 145.40/148.50.’ Our view of range trading was incorrect, as USD plummeted and closed at 144.45 (-2.21%). It continues to drop in early Asian trade today. While deeply oversold, further weakness is not ruled out. Support levels are at 143.05 and 142.50. On the upside, a breach of 145.15 (minor resistance is at 144.50) would suggest the strong downward pressure has eased.”
1-3 WEEKS VIEW: “After holding a negative USD view since early this month (as annotated in the chart below), we pointed out yesterday (10 Apr, spot at 146.70) that ‘downward momentum is beginning to ease and a breach of 148.50 would indicate that the weakness in USD has stabilised.’ Our caution was unfounded as USD subsequently plunged. Given the renewed momentum, USD is likely to continue to decline. The two mid-term support levels are at 142.50 and 139.55. The latter level is last year’s low. On the upside, the ‘strong resistance’ level has moved lower to 146.30 from 148.50.”
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