In light of the recent performance, USD/CNH is now looking at the key support at 6.7000, noted FX Strategists at UOB Group.
24-hour view: “Yesterday, we expected USD to ‘drift lower and test the support at 6.7300’. While our view for USD to weaken is correct, we did not anticipate the sudden plunge that sent it to a low of 6.7135. The rapid decline appears to be overdone and further sustained weakness appears unlikely. For today, USD is more likely to consolidate and trade sideways at these lower levels, expected to be between 6.7100 and 6.7400.”
Next 1-3 weeks: “Our latest narrative was from last Friday (02 Oct, spot at 6.7600) wherein USD ‘could weaken further but the major support at 6.7165 could be out of reach this time round’. In other words, we did not anticipate the sudden surge in downward momentum as USD plunged to a low of 6.7135 yesterday (05 Oct). From here, further weakness appears likely and the focus now is at the round-number support level of 6.7000. On the upside, the ‘strong resistance’ level has moved lower to 6.7700 from 6.8250.”