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In light of the recent price action, FX Strategists at UOB Group now believe USD/CNH could head to the 7.0350 level in the next weeks.

Key Quotes

24-hour view: “The sudden lurch in USD that hit a low of 7.0492 was unexpected. The sharp and rapid decline appears to be running ahead of itself and further weakness in USD appears unlikely. From here, USD could edge slightly higher but any advance is viewed as part of a 7.0550/7.0900 range.”

Next 1-3 weeks: “While we noted yesterday (07 Apr, spot at 7.1055) that the ‘prospect for a break of 7.1700 continues to diminish’, the sudden and sharp drop in USD that sent it tumbling to 7.0492 came as a surprise. The breach our ‘strong support’ level at 7.0550 (low of 7.0492) indicates that last month’s 7.1652 high could remain as a top for a while more. In other words, the risk from here has shifted to the downside. Only a move back above 7.1120 would indicate our view for USD to move to 7.0350 is wrong.”