FX Strategists at UOB Group see USD/CNH gathering extra downside pressure if 7.0850 is cleared.
Key Quotes
24-hour view: “Yesterday, we held the view that USD ‘could dip to 7.1150 first before a recovery can be expected’. However, it dropped to a low 7.1022 before ending the day on a soft note at 7.1088. USD extended its decline upon opening this morning but has since rebounded from a low of 7.0890. The rapid decline appears to be running ahead of itself and further USD weakness is unlikely for today. USD is more likely consolidate and trade between 7.0850 and 7.1250.”
Next 1-3 weeks: “The pace and extent of the pull-back from last week’s 7.1966 high came as a surprise. For now, we continue to hold the view that USD is ‘trading sideways’ but if USD closes below 7.0850, it could signal the start of a deeper decline in USD. At this stage, the prospect for such a move is not that high but it would increase unless USD can move above 7.1500 within these few days.”
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