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FX Strategists at UOB Group note USD/CNH could drop further on a breach of the 6.5319 level in the next weeks.

Key Quotes

24-hour view: “After trading in quiet manner for several days, the sudden sharp sell-off in USD came as a surprise. Strong downward momentum suggests further USD weakness is likely even though the year-to-date low of 6.5319 could be just out of reach. Resistance is at 6.5580 followed by 6.5730.”

Next 1-3 weeks: “We have held the same view for a week wherein USD ‘is in a consolidation and could trade between 6.5400 and 6.6200 for a period of time’. USD weakened sharply yesterday (01 Dec) and is approaching the bottom of the range at 6.5400. Downward momentum is beginning to improve but is not strong for now. USD has to stage a NY closing below the year-to-date low of 6.5319 in order to indicate that the next down-leg towards 6.4960 has started. The prospect for such a move is not high for now but it would increase as long a USD does move above 6.5800 within these few days.”