24-hour view: While we expected USD to advance yesterday, we were of the view that “a sustained rise above 7.2000 appears unlikely”. USD then rose to 7.1916 before staging a surprising sharp selloff to 7.1180. The sharp and swift drop is overdone and USD is unlikely to weaken further. Today, USD is more likely to trade in a range of 7.1200/7.1600. 

Next 1-3 weeks: The USD strength that started late last week ended abruptly as after rising to a fresh high of 7.1916, it then plunged below our ‘strong support’ level of 7.1400 (low of 7.1180). The 7.1916 is likely an interim top and USD has likely moved into a consolidation phase. For the time being, USD is likely to trade between 7.0900 and 7.1800.