24-hour view: We expected USD to edge higher yesterday, but we were of the view that it “is unlikely to break clearly above 139.50.” However, USD broke above 139.50 and rose to a high of 139.99 in NY trade before trading sideways for the rest of the session. There is no clear increase in momentum and USD is unlikely to advance much further. Today, USD is more likely to trade sideways in a range between 138.80 and 140.05. 

Next 1-3 weeks: We turned negative USD early last week. After USD fell to 137.23 and rebounded, we indicated on Monday (17 Jul, spot at 138.55) that “while downward momentum has slowed somewhat, only a break of 139.50 would indicate that the USD weakness has stabilized.” Yesterday (19 Jul, spot at 138.90), we indicated that “downward momentum has waned further, and the chance of USD dropping further is slim.” USD then broke above 139.50, and USD weakness has stabilized. From here, we expect USD to trade in a range for now, likely between 138.00 and 141.00.