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FX Strategists at UOB Group still believe USD/CNH could drop and test the 6.7000 area in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the rapid decline appears to be overdone and further sustained weakness appears unlikely’ and held the view that USD ‘is likely to consolidate and trade between 6.7100 and 6.7400’. USD posted a range of 6.7169/6.7488 before closing on a firm note at 6.7488 (+0.44%). Upward momentum has improved a tad and from here, USD could edge higher to 6.7600. The strong resistance at 6.7700 is likely safe for now. Support is at 6.7370 followed by 6.7230.”

Next 1-3 weeks: “Our latest narrative was from last Friday (02 Oct, spot at 6.7600) wherein USD ‘could weaken further but the major support at 6.7165 could be out of reach this time round’. In other words, we did not anticipate the sudden surge in downward momentum as USD plunged to a low of 6.7135 yesterday (05 Oct). From here, further weakness appears likely and the focus now is at the round-number support level of 6.7000. On the upside, the ‘strong resistance’ level has moved lower to 6.7700 from 6.8250.”