USD/CNH is still expected to remain on the defensive although a move to 6.7165 looks unlikely for the time being.
24-hour view: “While we held the view that USD could dip below the major support at 6.7660 yesterday, we were of the view that ‘the next support at 6.7500 is unlikely to come into the picture’. However, USD easily cracked 6.7500 as it nose-dived to an overnight low of 6.7429. The decline over the past few days is severely oversold now and further USD weakness is not expected for today. USD is more likely to consolidate and trade between 6.7450 and 6.7750.”
Next 1-3 weeks: “Two days ago (15 Sep, spot at 6.7980) we highlighted that the negative phase that started in mid-August ‘has received a new lease of life’. We added, the next level to focus on is at 6.7660 followed by 6.7500. USD subsequently dropped at a furious pace and it cracked 6.7500 yesterday (low of 6.7429). Over the past 3 days, USD has lost a whopping -1.28%, its biggest 3- day loss in 20 months. It is not surprising that the rapid decline is oversold now. That said, downward momentum remains robust and the outlook for USD still remains weak. However, the pace of any further decline is likely to be slower and the next major support at 6.7165 may be out of reach this time round (there is a minor support 6.7300). Overall, only a break of 6.8100 (‘strong resistance’ level previously at 6.8230) would indicate that the current month-long negative phase has run its course.”