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UOB Group’s FX Strategists noted further decline in USD/CNH is predicted to meet strong contention at the 6.4130 level in the short-term horizon.

Key Quotes

24-hour view: “While we expected USD to weaken yesterday, we held the view ‘any weakness is unlikely to threaten the support at 6.4480’. The subsequent sharp drop in USD came as a surprise as it dropped to 6.4388. Strong downward momentum suggests USD is likely to weaken further towards 6.4280 (minor support is at 6.4350). Resistance is at 6.4480 followed by 6.4550.”

Next 1-3 weeks: “We highlighted last Friday that USD ‘is likely to trade sideways between 6.4400 and 6.5200’. USD dropped below 6.4400 yesterday and shorter-term momentum has improved. The risk has shifted to the downside even though month’s low near 6.4130 is expected to offer solid support. On the upside, a break of 6.4750 would indicate the current downside risk has dissipated.”