Weakness has not stabilized, but any further US Dollar (USD) decline is likely part of a lower range of 154.90/156.15. In the longer run, USD remains weak; if it breaks below 154.90, the next objective will be at 154.40, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD remains weak

24-HOUR VIEW: "We expected USD to 'trade with a downward bias yesterday,' but we were of the view that 'any decline is likely part of a lower trading range of 155.80/157.00.' Our view was incorrect, as USD plunged, reaching a low of 155.09. While the sharp drop appears to be excessive, the weakness has not stabilized just yet. However, any further decline is likely part of a lower range of 154.90/156.15. In other words, a sustained break below 154.90 is unlikely."

1-3 WEEKS VIEW: "We revised our USD view to negative yesterday (16 Jan, spot at 156.35), highlighting that 'the rapid increase in momentum indicates further USD weakness, with a technical target at 154.90.' We did not expect USD to approach 154.90 so quickly, as it plummeted for the second day in a row, reaching a low of 155.09. Our view bearish view remains unchanged, and if USD breaks below 154.90, the next objective will be at 154.40. On the upside, should USD rise above 156.70 (‘strong resistance’ level was at 157.60 yesterday), it would mean that USD is not declining further."