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FX Strategists at UOB Group do not expect USD/CNH to grind lower and test the 6.6030 region in the next weeks.

Key Quotes

24-hour view: “Our expectation for USD to ‘grind higher to 6.6980’ did not materialize as it traded between 6.6500 and 6.6838 before closing slightly lower at 6.6663 (-0.12%). Momentum indicators are mostly ‘neutral’ and USD is likely to consolidate from here, expected to be between 6.6520 and 6.6880.”

Next 1-3 weeks: “We have held a negative view in USD since last Friday, 16 Oct. In our latest narrative from Wednesday (21 Oct, spot at 6.6590), we indicated that USD ‘is still weak but the next major support at 6.6030 may not come into the picture so soon’. USD subsequently dropped to a low of 6.6275 before rebounding. Downward momentum is beginning to slow and this coupled with rather oversold conditions suggests 6.6030 could be out of reach this time round. That said, only a break of 6.6980 (no change in ‘strong resistance’ level) would indicate the risk for further USD weakness has eased.”