The US Dollar (USD) is expected to trade in a 7.2300/7.2650 range. USD must break and remain below the 7.2037 low before further weakness can be expected, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

USD must break below 7.2037 to continue downwards

24-HOUR VIEW: “While we expected USD to break below 7.2600 yesterday, we were of the view that 7.2500 could be out of reach. The subsequent spike in volatility was surprising, as USD nose-dived to 7.2037 and then rebounded to close at 7.2405 (-0.30%). The rebound in oversold conditions suggest USD is unlikely to weaken further. Today, we expect USD to trade in a 7.2300/7.2650 range.”

1-3 WEEKS VIEW: “We turned negative in USD yesterday (25 Jul, spot at 7.2655), indicating that it ‘is likely to trade with a downward bias towards 7.2500, with a lower probability of it reaching 7.2400.’ We did not anticipate the subsequent wild price action, as USD plunged to 7.2037 and then snapped back up. While further USD weakness is not ruled out, it must break and remain below the 7.2037 low before further decline can be expected. The likelihood of USD breaking clearly below the low will be intact provided that 7.2800 (‘strong resistance’ was at 7.2900 yesterday) is not breached.”