There is still room for USD/CNH to drop further and test the 6.40 level in the next weeks, note FX Strategists at UOB Group.
Key Quotes
24-hour view: “USD traded between 6.4191 and 6.4377 last Friday before closing little changed at 6.4218 (-0.03%). The underlying tone has weakened but any decline is likely limited to a test of the major support near 6.4130. The next major support at 6.4000 is not expected to come into the picture for now. Resistance is at 6.4330 followed by 6.4400.”
Next 1-3 weeks: “We expected USD to weaken and in our latest update from last Wednesday (10 Feb, spot at 6.4220), we highlighted that ‘a break of 6.4130 would indicate USD could weaken further to 6.4000’. USD subsequently dropped to 6.4131 before rebounding slightly. The outlook remains weak and we continue to see chance for USD to break 6.4130 and move lower to 6.4000. Only a breach of 6.4600 (no change in ‘strong resistance’ level) would indicate that the downside risk has dissipated.”
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