Slight increase in momentum is likely to lead to a higher trading range of 7.2700/7.2980. In the longer run, decline in US Dollar (USD) seems excessive, but there is potential for a test of 7.2420, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Potential for a test of 7.2420

24-HOUR VIEW: "We expected USD to 'trade in a 7.2550/7.2950 range' yesterday. It subsequently traded in a tight range of 7.2666/7.2896, closing at 7.2831 (+0.18%). There has been a slight increase in momentum, but this is likely to lead to a higher trading range of 7.2700/7.2980 instead of sustained advance."

1-3 WEEKS VIEW: "We continue to hold the same view as Tuesday (21 Jan, spot at 7.2720). As indicated previously, while the sharp decline on Monday 'seems excessive, there is potential for USD to test the support at 7.2420.' We will continue to hold the same view, provided that 7.3200 (‘strong resistance’ level was at 7.3230 yesterday) is not breached."