FX Strategists at UOB Group suggested USD/CNH could now attempt some consolidation after charting a short-term bottom.
Key Quotes
24-hour view: “We highlighted yesterday USD “could move above 7.0250 but the next resistance at 7.0330 is unlikely to come into the picture”. However, USD briefly popped to a high of 7.0375 before dropping back quickly. The combination of overbought conditions and waning momentum suggests that a temporary top could be in place. For today, USD is likely to trade with a downward bias but any weakness is viewed as part of 7.0100/7.0310 range (a sustained decline below 7.0100 is not expected)”.
Next 1-3 weeks: “After USD plummeted to 6.9530 last Thursday, we highlighted on Friday (08 Nov, spot at 6.9800) that “while the outlook for USD remains weak, the next major support at 6.9200 may not come into the picture so soon”. USD subsequently rebounded and moved above the 7.0220 ‘strong resistance’ yesterday. The price action suggests that 6.9530 is a short-term bottom. The current movement is viewed as part of a broader consolidation phase. In other words, USD is expected to trade sideways between 6.9750 and 7.0600 for a period”.
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