FX Strategists at UOB noted that further downside in USD/CNH looks increasingly unlikely in the near-term.
Key Quotes
24-hour view: “We highlighted yesterday that ‘the sharp and rapid rise appears to be running ahead of itself and further sustained USD is unlikely for today’ and we expected USD to ‘consolidate and trade between 6.5700 and 6.6400’. While USD trade sideways, the range registered was narrower than expected (6.5867/6.6284). Further consolidation in USD would not be surprising, likely between 6.5830 and 6.6300.”
Next 1-3 weeks: “In our latest narrative from Monday (09 Nov, spot at 6.5830), we indicated that ‘the outlook for USD is still weak and the next support is at 6.5300’. USD subsequently dropped to 6.5476 before snapping back up. Downward momentum has eased considerably and the odds for further USD weakness have diminished. However, only a break of 6.6600 (no change in ‘strong resistance’ level) would indicate that the current downward pressure has eased.”
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