The prospects for further downside in USD/CNH remain well on the cards in the short-term, commented UOB Group’s FX Strategists.
Key Quotes
24-hour view: “Yesterday, we expected USD to ‘trade sideways between 6.4900 and 6.5150’. USD subsequently dropped to 6.4881 before closing on a soft note at 6.4910 (high has been 6.5018). Downward momentum has improved slightly and USD could dip below 6.4850 but the next major support at 6.4700 is unlikely to come under threat (there is another minor support at 6.4800). Resistance is at 6.4990 followed by 6.5025.”
Next 1-3 weeks: “There is no change in our view from yesterday (21 Apr, spot at 6.5000). The USD weakness that started about one week ago is still intact and we continue to see downside risk. A break of 6.4850 would shift the focus to 6.4700. On the upside, a breach of 6.5200 (‘strong resistance’ level was at 6.5300 yesterday) would indicate that the downside risk has dissipated.”
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