FX Strategists at UOB Group noted USD/CNH could drop further and test the 6.9500 region in the next weeks.
Key Quotes
24-hour view: “The current movement in USD is viewed as an on-going consolidation phase. For today, USD is likely to trade sideways, expected to be between 6.9920 and 7.0200.”
Next 1-3 weeks: “In our previous update from last Tuesday (07 Jul, spot at 7.0150), we highlighted that USD ‘is under pressure’. We added, ‘a daily closing below 6.9950 could potentially lead to further sharp loss’. USD subsequently dropped to a low of 6.9815 on Thursday (09 Jul) before closing at 6.9970. USD rebounded last Friday (10 Jul) and while downward momentum has been dented, only a break of 7.0390 (‘strong resistance’ level previously at 7.0550) would indicate that the current downside risk has dissipated. Until then, USD could weaken further to 6.9650 with lower odds for extension to 6.9500. Meanwhile, oversold shorter-term conditions could lead to a few days of consolidation.”
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