24-hour view: Our view for USD to trade in a range yesterday was incorrect. Instead of range trading, USD soared to its highest level since Nov last year (high of 147.36). The advance was short-lived, as USD plunged to 145.66 from the high. While there is no clear increase in downward momentum, USD could drop below the low near 145.65. However, any decline is viewed as part of a broad 145.35/146.70 range. In other words, USD is not expected to break clearly below 145.35. 

Next 1-3 weeks: Two days ago (28 Aug, spot at 146.45), we highlighted that “mild upward pressure suggests USD could grind higher to 147.00, possibly 147.50. Yesterday, USD rose briefly to 147.36 and then plummeted to a low of 145.66. While our ‘strong support’ level at 145.35 has not been clearly breached, the mild upward pressure has faded. Downside risk appears to be building, but it is too early to tell if USD is ready to decline in a sustained manner. For the time being, we think USD is likely to trade in a range, probably between 144.50 and 147.20.