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There is still scope for USD/CNH to slip back to the 6.80 area in the next weeks, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “In line with our expectation, USD traded sideways last Friday, albeit within a narrower range than anticipated. The underlying tone has weakened somewhat and from here, USD could drift lower but the month-to-date low at 6.8143 is unlikely to come under threat (minor support is at 6.8220). Resistance is at 6.8380 followed by 6.8450.”

Next 1-3 weeks: “In our latest narrative from last Wednesday (09 Sep, spot at 6.8510), we indicated that ‘the odds for further USD weakness have diminished considerably’. We added, ‘unless USD moves and stays below 6.8350 within these 1 to 2 days, a breach of the ‘strong resistance’ at 6.8800 would not be surprising and would indicate that the negative phase in USD that started in mid-August has run its course’. USD subsequently traded in a quiet manner and downward momentum continues to deteriorate. That said, as long as 6.8550 (‘strong resistance’ previously at 6.8800) is intact, there is still a slim chance that USD could push lower towards the support at 6.8000.”