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FX Strategists at UOB Group see further downside in USD/CNH as unlikely in the near-term.

Key Quotes

24-hoour view: “We highlighted yesterday that USD ‘could edge lower towards the 6.8250 support’. We added, ‘the prospect for a sustained decline below this level is not high’. USD subsequently dropped to a low of 6.8250 before rebounding quickly and closed slightly higher at 6.8445 (+0.16%). Momentum appears to be neutral from here and USD is likely consolidate and trade sideways. Expected range for today, 6.8300/6.8500.”

Next 1-3 weeks: “Our latest narrative was from Monday (07 Sep, spot at 6.8360) wherein ‘downward momentum has eased somewhat but there is still chance for USD to push lower towards 6.8000’. Momentum has eased further as USD staged a relatively strong advance of +0.32% yesterday (NY close of 6.8536). From here, unless USD moves and stays below 6.8350 within these 1 to 2 days, a breach of the ‘strong resistance’ at 6.8800 (no change in level) would not be surprising and would indicate that the negative phase in USD that started in midAugust has run its course. To put it another way, the odds for further USD weakness have diminished considerably.”