USD/CNH is seen facing some consolidation ahead of a probable drop to 6.4960, in opinion of UOB Group’s FX Strategists.
Key Quotes
24-hour view: “We expected USD to ‘consolidate within a 6.5100/6.5300 range’ yesterday. USD subsequently dipped to a low of 6.5075 before rebounding to end the day largely unchanged at 6.5190 (-0.03%). Momentum indicators are still mostly neutral and USD could continue to consolidate. Expected range for today, 6.5100/6.5310.”
Next 1-3 weeks: “We noted last Wednesday that ‘downward momentum is improving but USD has to close below the year-to-date low of 6.5319 in order to indicate that next down-leg has started’. USD plummeted to a low of 6.5070 last Friday before closing at 6.5170 (-0.29%). While oversold shorter-term conditions could lead to a couple of days of consolidation first, USD is expected to weaken to 6.4960. Looking forward, the next support is at 6.4700. All in, the current weak phase is deemed as intact as long as USD does not move above 6.5650 (‘strong resistance’ level).”
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