In opinion of FX Strategists at UOB Group, USD/CNH risks a deeper pullback in the near-term.
Key Quotes
24-hour view: “Our expectation for USD to trade sideways was incorrect as it slumped to an overnight low of 6.9982. Despite the relatively rapid decline, downward momentum has not improved by much. From here, USD could dip below the overnight low but any weakness is viewed as part of a 6.9950/7.0250 range (a sustained decline below 6.9950 is not expected).”
Next 1-3 weeks: “USD dropped to 6.9982 yesterday before ending on a soft note at 7.0100 (-0.16%). While downward momentum is beginning to improve, we continue to hold the same view as from Tuesday (25 Feb, spot at 7.0200) wherein USD is expected to trade sideways within a 6.9800/7.0500 range. That said, the risk of a deeper would increase from here unless USD can move and stay above 7.0250 within these few days.”
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