The US Dollar (USD) is anticipated to consolidate within the range of 1.3490 to 1.3520. Despite limited momentum, UOB Group FX strategists Quek Ser Leang and Peter Chia note that the USD is likely to trend lower towards the key support level at 1.3460.
Short-Term Outlook: USD Heading Lower
In the past 24 hours, the USD’s price action suggests consolidation. “We noted yesterday that ‘the current price action appears to be part of a consolidation, likely between 1.3485 and 1.3515.’ USD subsequently traded in a narrower range than expected (1.3492/1.3515), closing largely unchanged at 1.3505 (+0.04%). Flat momentum indicators continue to suggest consolidation, likely between 1.3490 and 1.3520,” the strategists commented.
Medium-Term Outlook: Key Support Level at 1.3460
Over the next one to three weeks, the USD is expected to remain quiet, with little change from previous forecasts. “USD traded in a quiet manner yesterday, and there is not much to add to our update from Monday (08 Jul, spot at 1.3490). As highlighted, while USD declined last Friday, downward momentum has not increased much. However, USD is likely to head lower towards the significant support level at 1.3460. At this time, it is too early to determine if USD can break clearly below this level. The risk of USD breaking below 1.3460 will remain intact as long as 1.3535 (no change in ‘strong resistance’ level) is not breached,” the strategists added.
Conclusion
The US Dollar is expected to consolidate in a narrow range in the short term, with a potential decline towards the support level at 1.3460. Market participants should monitor the resistance level at 1.3535, as a breach could alter the downward trajectory.
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