FX Strategists at UOB Group noted the outlook on USD/CNH remains positive while above the 7.0850 level.
Key Quotes
24-hour view: ‘USD traded between 7.1110 and 7.1318 before ending the day at 7.1210. The sudden lurch lower upon opening this morning has resulted in a pick-up in downward momentum. That said, any weakness is likely limited to a probe 7.0930. On the upside, only a move above 7.1300 (minor resistance at 7.1220) would indicate that the current downward pressure has eased.”
Next 1-3 weeks: “We highlighted last Monday (27 Apr, spot at 7.0850) that ‘downside risk in USD is beginning to increase’ and added, ‘only a break of 7.0650 would improve the prospect of USD moving towards 7.0370’. USD dropped to 7.0535 on Thursday (30 Apr) before surging suddenly to a high of 7.1405 on Friday. The strong rebound appears to have room to test the March’s peak near 7.1650. At this stage, the odds for USD to move above this level in a sustained manner are not high. All in, the outlook is for USD is deemed as positive as long as it holds above 7.0850.”
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