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Downside momentum around USD/CNH is gathering pace quickly, noted UOB Group’s FX Strategists.

Key Quotes

24-hour view: “While we expected USD to weaken yesterday, we were of the view that ‘6.5300 is unlikely to come into the picture’. The subsequent weakness in USD exceeded our expectation as USD dropped to 6.5255. Downward momentum appears to have slowed somewhat but there is room for the weakness in USD to test 6.5180 first before stabilizing. Resistance is at 6.5400 followed by 6.5450.”

Next 1-3 weeks: “Yesterday, we noted that USD ‘is under mild downward pressure and a daily closing below 6.5400 could lead to weakness towards 6.5300’. We did not anticipate the subsequent sharp decline as USD dropped to 6.5255 before closing at 6.5317. The rapid improvement in downward momentum is expected to lead to further USD weakness even though 6.5000 may not come into the picture so soon. Overall, the current downward pressure in USD is deemed intact as long as it does not move above 6.5530 (‘strong resistance’ level was at 6.5630 yesterday).”