Spot could extend the correction lower to the 110.25 level in the near term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that “the pressure is clearly on the downside and 110.75 is likely to be tested”. While the expectation was not wrong, the subsequent sharp and rapid rebound from a low of 110.74 came as a surprise. At this stage, the bounce is viewed as part of a correction even though there is scope for a test of the strong 111.80 resistance. At this stage, we do not anticipate a clear break above this level. Support is at 111.10 followed by the low near 110.75. The latter level is likely ‘safe’, at least for today”.

Next 1-3 weeks: “We just shifted from a bullish to neutral stance yesterday and there is no change to the view. As highlighted, while the outlook for USD is deemed as neutral, the immediate pressure has shifted to the downside and a test of month-to-date low near 110.25 would not be surprising. Only a clear break back above 111.80 would indicate that the current downward pressure has eased”.