24-hour view: We expected USD to trade in a sideways range of 7.1280/7.1585 last Friday. USD then rose to 7.1555, dropped to 7.1242, and then closed at 7.1290 (-0.24%). There is a slight increase in downward momentum. Today, as long as USD stays below 7.1500 (minor resistance is at 7.1380), it is likely to edge lower. As downward momentum is not strong for now, the chance of USD breaking the major support at 7.1100 is not high.

Next 1-3 weeks: We have held a negative USD view since the middle of last month. In our most recent narrative from last Thursday (30 Nov, spot at 7.1335), we indicated that the “USD weakness from two weeks ago is intact, and the level to monitor is still at 7.1100.” While we continue to expect USD to weaken, short-term downward momentum has increased somewhat. From here, if USD breaks below 7.1100, the next level to watch is 7.0600. Overall, only a breach of 7.1660 (no change in ‘strong resistance’ level) would mean that the USD weakness has stabilised.