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FX Strategists at UOB Group now suggested that USD/CNH has now shifted its focus to the 6.8850 level.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘barring a move above 6.9370, USD is likely to weaken toward 6.9200, possibly as low as 6.9150’. The subsequent USD weakness exceeded our expectation by a wide margin as it dropped to an overnight low of 6.9056. The rapid decline appears to be running ahead of itself and while a drop below the overnight low of 6.9056 is not ruled out, the odds for a breach of the next support at 6.8950 are not high. Resistance is at 6.9180 followed by 6.9250.”

Next 1-3 weeks: “We noted yesterday (18 Aug. spot at 6.9315) that ‘if there is a NY closing below 6.9300, it would indicate the start of a period of sustained weakness in USD that could lead to a move to 6.9050, possibly even to 6.8850’. We added, ‘the prospect for the start of a negative phase is rather high unless USD moves above 6.9400 within these 1 to 2 days’. USD subsequently dropped to within a few pips of 6.9050 (overnight low of 6.9056) before ending the day on a weak note at 6.9079 (-0.36%). In other words, the price actions suggest USD has moved into a negative phase and the next level to focus on is 6.8850. On the upside, the ‘strong resistance’ level at 6.9400 remains unchanged for now.”