24-hour view: We expected USD to trade in a range of 7.2920/7.3300 yesterday. We did not anticipate the spike in volatility as USD rose to 7.3360, plummeted to 7.2780 before closing at 7.2893 (-0.24%). The rapid drop from the high appears to be overdone, and USD is unlikely to weaken much further. Today, USD is more likely to trade sideways in a range of 7.2700/7.3200. 

Next 1-3 weeks: Our view from yesterday (21 Aug, spot at 7.3100) still stands. As highlighted, USD could consolidate for a few days before breaking above last week’s high of 7.3490. However, if USD breaks below 7.2500 (‘strong support’ level), it would suggest that USD is not advancing further.