24-hour view: After USD fell to 137.23 last Friday and then rebounded strongly, we indicated yesterday that “the rebound in severely oversold conditions suggests USD is unlikely to weaken further” and we held the view that USD “is more likely to trade in a range of 137.80/139.00.” USD dipped to a low of 138.07 in early London trade, rebounded sharply to 139.40 and then eased off to end the day little changed at 138.71 (-0.01%). The price actions appear to be part of a consolidation phase. Today, we expect USD to trade in a range between 138.20 and 139.30. 

Next 1-3 weeks: Our update from yesterday (17 Jul, spot at 138.55) still stands. As highlighted, while the recent downward momentum has slowed somewhat, only a break of 139.50 would indicate that the USD weakness that started early last week has stabilized. However, it is worth nothing that USD rose briefly to 139.40 in early NY session, and downward momentum has slowed further.