Price action in USD/CNH remains tilted to the downside in the short-term horizon, commented FX Strategists at UOB Group.
24-hour view: “Our expectation for USD to consolidate last Friday was incorrect as it ratcheted lower to 6.3581. While USD traded on a firm note after opening in Asia, the risk remains on the downside. From here, barring a breach of 6.3850, USD could test the major support at 6.3550 before a more sustained recovery can be expected. The next support at 6.3300 is unlikely to come into the picture.”
Next 1-3 weeks: “Last Thursday (27 May, spot at 6.3850), we highlighted that USD ‘could weaken further to 6.3550 but oversold shorter-term conditions could lead to consolidation first’. However, instead of consolidating, USD continues to weaken as it dropped to a fresh low of 6.3581 on Friday. From here, a break of 6.3550 would not be surprising and would shift the focus to 6.3300. Overall, the risk for USD remains on the downside unless it can move above 6.4000 (‘strong resistance’ level previously at 6.4150).”