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FX Strategists at UOB Group suggested the idea that USD/CNH could have bottomed out in the 6.8450 region.

Key Quotes

24-hour view: “While USD did not advance further to 6.9250 as expected yesterday (high: 6.9180), the upside bias remains intact. However, as the momentum has moderated, the path to 6.9250 is likely to be gradual rather than explosive. Support is at 6.9020 followed by 6.8840 and only a break of the latter would indicate that USD is transiting into a sideways pattern.”

Next 1-3 weeks: “We highlighted yesterday (21 Jan, spot at 6.8700) that the decline in USD ‘is in oversold territory’ but held the view that it ‘could dip below 6.8400 but the July 2019 low near 6.8170 is likely out of reach’. The manner by which USD subsequently surged to a high of 6.9126 came as a surprise. While our ‘strong resistance’ at 6.9200 is still intact, the outsized gain is enough to indicate that USD has found a short-term bottom at 6.8460 on Monday (20 Jan). The current USD strength is viewed as the early stages of a correction phase. From here, the recovery could extend to 6.9650. At this stage, the prospect for a sustained rise above 6.9650 is not high. On the downside, support is at 6.8800 but only a move below 6.8650 would suggest the correction phase has ended.”