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USD/CNH could extend the corrective downside to the 7.0200/7.0000 area, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD traded between 7.0507 and 7.0800 yesterday, narrower than out expected range of 7.0400/7.0800. The firm daily closing (7.0795, +0.41%) has resulted in a firmed underlying tone. From here, USD could edge higher but any advance is expected to face solid resistance at 7.0950. Support is at 7.0700 followed by 7.0550”.

Next 1-3 weeks: “We have held the same view since Monday (08 Jun, spot at 7.0800) wherein USD ‘could weaken to 7.0400’. USD briefly touched 7.0400 in overnight trading before rebounding quickly. While oversold short-term conditions could lead to a few days of consolidation first, the negative phase in USD is deemed as intact until 7.0950 is breached (‘strong resistance’ level was previously at 7.1210). Looking ahead, the next support below 7.0400 is at 7.0200 followed by 7.0000.”

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