FX Strategists at UOB Group remain bearish on USD/CNH but a drop to 6.6030 looks unlikely in the short-term.
Key Quotes
24-hour view: “Yesterday, we held the view that ‘the decline in USD is oversold but there is room for another down-leg to 6.6580’. Our view was not wrong as USD dropped to a low of 6.6563 before closing on a soft note at 6.6649 (-0.21%). While the weakness in USD has moved ever further into oversold territory, it is not showing any sign of stabilization just yet. Only a break of 6.6750 (minor resistance at 6.6660) would indicate the current weakness has stabilized. Until then, the risk is still for further USD weakness even though a sustained drop below the major support at 6.6450 is unlikely.”
Next 1-3 weeks: “We highlighted yesterday (20 Oct, spot at 6.6730) that ‘downward momentum in USD has improved further; next level to focus on is at 6.6450’. USD dropped to a low of 6.6563 during NY hours and closed on a soft note at 6.6647 (-0.21%). While we continue to expect further USD weakness, oversold shorter-term conditions suggest a slower pace of decline. A break of 6.6450 would not be surprising but the next major support at 6.6030 may not come into the picture so soon. Overall, USD is expected to stay under pressure unless it can move above 6.6980 (‘strong resistance’ level was at 6.7050 yesterday).”
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