Downward momentum is building, but this will likely lead to a lower trading range of 7.3200/7.3500 instead of a sustained decline. In the longer run, upward momentum has dissipated; US Dollar (USD) is likely to trade in a range between 7.3100 and 7.3650. UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum is building

24-HOUR VIEW: "USD traded in a quiet manner last Thursday. On Friday, we indicated that 'flat momentum indicators continue to suggest range trading, most likely between 7.3380 and 7.3550.' USD subsequently traded in a wider range of 7.3338/7.3578. It opened on a soft note in early Asian trade today. While downward momentum is building, this will likely lead to a lower trading range of 7.3200/7.3500 instead of a sustained decline."

1-3 WEEKS VIEW: We have held the view that 'there is room for USD to retest the 7.3700' since early last week. On Tuesday (14 Jan, spot at 7.3410), we noted that 'upward momentum is beginning to fade, and a breach of 7.3250 (‘strong support’ level) would suggest that 7.3700 is not coming into view.' USD traded in a quiet manner over the past few days, and upward momentum has dissipated. There has been a slight increase in downward momentum, but it is not sufficient to indicate a sustained decline. From here, we expect USD to trade in a range, most likely between 7.3100 and 7.3650."