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UOB Group’s FX Strategists noted USD/CNH risks a deeper a pullback if the 6.4400 level is cleared in the next weeks.

Key Quotes

24-hour view: “Yesterday, we expected USD to ‘trade sideways between 6.4580 and 6.4820’. USD subsequently traded between 6.4548 and 6.4756 before closing on a soft note at 6.4595 (-0.25%). The underlying tone has weakened and this could lead to USD drifting lower to 6.4450. For today, a sustained decline below this level is unlikely (there is another support at 6.4400). Resistance is at 6.4650 followed by 6.4730.”

Next 1-3 weeks: “There is not much to add to our update from Monday (01 Feb, spot at 6.4500). As highlighted, downward momentum is beginning to improve but USD has to close below 6.4400 before a move towards 6.4130 can be expected. The prospect for such a move has increased and would continue to increase as long as USD does not move above 6.4900 (no change in ‘strong resistance’ level). Looking ahead, the support below 6.4400 is at 6.4130.”