USD/CNH: Extra losses await below 6.9645 – UOB

FX Strategists at UOB Group noted USD/CNH risks further retracements if/when 6.9645 is cleared.

Key Quotes

24-hour view: “USD traded in a choppy manner last Friday as it dropped to 6.9755 before rebounding quickly to close at 6.9920 (-0.13%). The soft price action after opening this morning suggests USD could dip below the 6.9755 low. However, downward momentum is lackluster at best and the next support at 6.9650 is unlikely to come into the picture. On the upside, only a break of 7.0020 (minor resistance is at 6.9930) would indicate the current mild downward pressure has eased.”

Next 1-3 weeks: “In our latest update from last Tuesday (28 Jul, spot at 6.9900), we highlighted that ‘breach of 6.9750 would indicate end of correction phase and increase risk of USD moving below the month-to-date low of 6.9645’. Since then, USD has traded mostly sideways and downward momentum has barely improved. That said, looking forward, the downside risk still appears to be higher but USD has to crack and close below the July’s low of 6.9645 before a sustained weakness can be expected.”