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Extra weakness in USD/CNH is likely below the 6.5150 level, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Last Friday, we noted that ‘the current movement is viewed as part of a consolidation and USD is likely to trade between 6.5200 and 6.5400’. Our view was not wrong even though USD traded within a narrower range than expected (6.5208/1.6367). Neutral momentum indicators suggest that USD could continue to consolidate, expected to be within a 6.5210/6.5410 range.”

Next 1-3 weeks: “Our latest narrative was from last Thursday (15 Apr, spot at 6.5320) where we indicated that ‘rapid improvement in downward momentum is expected to lead to further USD weakness even though 6.5000 may not come into the picture so soon’. USD subsequently traded in a quiet manner and downward momentum is beginning to wane. For now, we continue to hold the same view but USD has to move and stay below 6.5150 within these couple of days or the odds for further USD weakness would diminish quickly. On the upside, a breach of 6.5530 (no change in ‘strong resistance’ level) would indicate that the downside risk has dissipated.”