In opinion of FX Strategists at UOB Group, the pair’s decline appears to have room to test the 112.00 handle in the short term.
“While USD is still holding within the expected 112.50/114.20 consolidation range, the rapid pace of the decline over the past 24 hours was unexpected. At this stage, we view the current weakness as a ‘deep pull-back’ and not the start of a bearish reversal”.
“That said, the pullback has scope to extend lower towards 112.00. Only a clear break below this level would indicate that the start of a bearish phase. For now, the odds for such a move are not high but unless USD can reclaim 113.40 within these 1 to 2 days, the immediate downward pressure would increase quickly”.