UOB Group Currency Analysts Quek Ser Leang and Peter Chia note that the US Dollar (USD) will trade in the 7.2300/7.2650 range. The USD needs to break through the 7.2037 low and hold below it to see further weakness.

USD needs to break below 7.2037 to continue falling

24-HOUR VIEW: “While yesterday we expected the USD to fall below 7.2600, we thought 7.2500 might be out of reach. The subsequent spike in volatility was surprising as the USD fell to 7.2037 before rebounding to close at 7.2405 (-0.30%). The rebound in oversold conditions suggests the USD is unlikely to weaken further. Today we expect the USD to trade in a range of 7.2300/7.2650.”

1-3 WEEK VIEW: “Yesterday (July 25, Spot 7.2655) USD turned negative, indicating that it is “likely to trade on a downside bias towards 7.2500, with a lower probability of reaching 7.2400.” We did not anticipate any acute price action thereafter, as USD fell to 7.2037 and then rose sharply. While further USD weakness is not ruled out, it needs to break and stay below the 7.2037 low before further declines can be expected. The probability of a clear USD break below the low is intact, provided that 7.2800 (the “strong resistance” yesterday was at 7.2900) is not broken.”