FX Strategists at UOB Group noted USD/CNH keeps the negative outlook and faces support at 6.4300 ahead of 6.4000.
Key Quotes
24-hour view: “While our expectation for USD to weaken yesterday was correct, the manner by which it plunged to a low of 6.4400 came as a surprise (we were of the view that 6.4720 is likely out of reach). The outsized drop appears to be overdone but there is room for USD to test 6.4300 first before the current weakness should stabilize. Resistance is at 6.4720 followed by 6.4900.”
Next 1-3 weeks: “Yesterday (04 Jan, spot at 6.4920), we highlighted that ‘downward momentum is improving and USD could weaken further to 6.4720’. We added, ‘a break of this level would open up the way for further weakness towards 6.4450’. While our view for a lower USD was not wrong, the sudden and outsized drop that led to a low of 6.4400 came as surprise. The price actions suggest USD is likely to weaken further. The next support is at 6.4300 followed by 6.4000. Overall, USD is likely to remain under pressure unless it can move above 6.5100 (‘strong resistance’ level was at 6.5250 yesterday).”
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