24-hour view: The sharp drop of -0.40% (NY close of 7.2705) came as a surprise (we were expecting USD to trade sideways). Despite the relatively large decline, downward momentum has not improved all that much. That said, barring a break above 7.2910 (minor resistance is at 7.2850), USD is likely to grind below 7.2600. The next major support at 7.2390 is unlikely to come into view. 

Next 1-3 weeks: After USD dropped sharply to a low of 7.2921 on Monday, in our most recent narrative from Tuesday (12 Sep, spot at 7.3035), we highlighted that “while it is premature to expect a major reversal, the sharp pullback could extend to 7.2600.” Yesterday, USD fell to a low of 7.2695. The increase in momentum suggests USD could break below 7.2600. The next support level is at 7.2390. On the upside, if USD breaks above 7.3200 (‘strong resistance’ level previously at 7.3520), it would indicate that the current downward pressure has faded.