According to Markets Strategist Quek Ser Leang at UOB Group, USD/IDR could extend the upside bias further in the short-term horizon.
“We highlighted last Monday (07 Feb, spot at 15,125) that ‘There is room for USD/IDR to rise to 15,190’. We added, ‘In view of the overbought short-term conditions, a sustained rise above this level is unlikely this week’. USD/IDR subsequently rose to 15,146, closed at 15,130 before surging above 15,190 in Asian trade today.”
“The price actions suggest USD/IDR is likely to advance further this week. Resistance levels are at 15,270, followed by a major level at 15,350. On the downside, support is at 15,130, a break of 15,050 would indicate that USD/IDR is not advancing further.”
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The USD/IDR exchange rate will continue to trend higher in the near term, according to a new report from United Overseas Bank (UOB). The report sees further upside in the pair as low-yielding currencies like the Indonesian Rupiah (IDR) continue to struggle against higher yielding ones like the US Dollar (USD).
UOB notes that the Rupiah has seen persistent weakness in recent months due to its reliance on commodities and recent political events in the country. The bank also highlighted the US economy is showing signs of strength, boosting demand for the USD.
The report states that the pair’s short-term upward trend is likely to continue as long as the US economy continues to improve and Indonesia’s fundamentals remain weak. Analysts at UOB predict the pair could trade around 14,350 in the near future.
The report also says that from a technical perspective, the USD/IDR is likely to stay in an uptrend as long as it remains above the 13,950 level. This suggests that the pair could continue to move higher in the coming weeks.
However, analysts at UOB caution that any further weakness in the US dollar could be a headwind for the pair and could push the exchange rate lower. They also note that any news of fresh volatility in the Indonesian markets could also pressure the USD/IDR lower.
Overall, the USD/IDR exchange rate is expected to stay in an uptrend in the near term, according to UOB. The bank expects the pair to continue to move higher as long as fundamentals remain in its favor.