FX Strategists at UOB Group noted further downside remains in place for USD/CNH with the next target at the 6.5200 level.
Key Quotes
24-hour view: “Yesterday, we highlighted that ‘strong downward momentum suggests further weakness is likely even though last week’s low at 6.5475 could be just out of reach’. However, USD managed to edge below 6.5475 before rebounding (low of 6.5458). Waning momentum coupled with oversold conditions suggest further sustained USD weakness is unlikely. For today, USD is more likely to consolidate and trade sideways at these lower levels. Expected range for today, 6.5450/ 6.5690.”
Next 1-3 weeks: “We highlighted yesterday that ‘the rapid improvement in shorter-term momentum suggests that a break of 6.5475 would not be surprising’. We added, ‘the next support is at 6.5200 followed by a major level at 6.4960’. USD subsequently edged below 6.5475 (low of 6.5458) before recovering. Oversold shorter-term conditions could lead to a 1 to 2 days of consolidation. However, as long as 6.6000 (‘strong resistance’ level was at 6.6250 yesterday) is intact, USD is expected to weaken further to 6.5200.”
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