Further US Dollar (USD) weakness is not ruled out, but the low near 7.0635 is solid support now. Only a breach of 7.2000 would mean that the weakness has stabilised, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann notes.

Bulls push towards 7.2000

24-HOUR VIEW: “USD plunged to 7.0636 on Monday and then snapped back to close at 7.1350. Yesterday (Tuesday), we indicated that ‘the rebound in severely oversold conditions suggests instead of continuing to decline, USD is likely to trade in a 7.1100/7.1700 range.’ USD subsequently traded between 7.1339/7.1650, closing on a firm note at 7.1619 (+0.38%). The slightly firmed underlying tone suggests USD is likely to edge higher today. However, any advance is unlikely to break clearly above 7.1800. On the downside, support levels are at 7.1450 and 7.1350.”

1-3 WEEKS VIEW: “After USD plunged to 7.0636 on Monday and then rebounded, we indicated yesterday (06 Aug, spot at 7.1400) that ‘while downward momentum has slowed somewhat, only a breach of 7.2000 (no change in ‘strong resistance’ level) would mean that the weakness has stabilised.’ We added, ‘until then, further USD weakness is not ruled out, but the low near 7.0635 is solid support now.’ Our view remains unchanged.”