24-hour view: Our view for “the rebound in USD to extend above 140.40” yesterday was incorrect as it plummeted to a low of 138.80. The rapid drop appears to be overdone but there is room for USD to test 138.50 before the risk of a rebound increases. In other words, USD is unlikely to break clearly below 138.50. On the upside, a breach of 139.60 (minor resistance is at 139.30) would indicate that the weakness in USD has stabilized.

Next 1-3 weeks: Yesterday (08 Jun, spot at 139.95), we highlighted that that USD “is likely to trade between 138.50 and 141.00”. While there is no change in our view for now, after the sharp drop yesterday, downward momentum is improving, albeit tentatively. Looking ahead, USD has to break clearly below 138.50 before a sustained decline is likely.