In opinion of FX Strategists at UOB Group, USD/CNH’s stance remains negative and targets a potential visit to the 6.8460 level in the next weeks.
Key Quotes
24-hour view: “We highlighted yesterday that ‘further weakness is not ruled out but oversold conditions suggest a more moderate pace of decline and the next support at 6.8650 may not come into the picture’. Our view was not wrong as USD rebounded after touching a low of 6.8690. Momentum indicators are beginning to turn ‘neutral’ and further USD weakness is unlikely for today. USD is more likely to trade sideways, expected to be between 6.8700 and 6.8900.”
Next 1-3 weeks: “After about a week, the 6.8850 level that we first indicated last Wednesday (19 Aug, spot at 6.9120) finally came into the picture as USD plummeted to a low of 6.8801 yesterday (26 Aug). The lackluster momentum over the past several days has perked up and as indicated in recent updates, the next support level of note below 6.8850 is at 6.8460. Overall, the current negative phase in USD is deemed as intact as long as USD stays below the 6.9180 (‘strong resistance’ level was previously at 6.9400).”
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