USD/CNH is likely to keep the side-lined theme unchanged in the next weeks, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “In line with expectation, USD dropped below 7.1050 yesterday but did not threaten the next support at 7.0950 (low of 7.0985). Despite the quick bounce off the low, the underlying tone remains soft. From here, barring a move back above 7.1230, USD could test the 7.0950 support. For today, a sustained decline below this level is unlikely.”
Next 1-3 weeks: “We highlighted on Monday (18 May, spot at 7.1250) that USD could ‘edge higher but any advance is expected to encounter solid resistance at 7.1560 followed by 7.1650’. USD subsequently touched 7.1443 but since then, it has not been able to make much headway on the upside. The mild upward pressure has dissipated and from here, USD has likely moved into a consolidation phase. From here, USD could trade between 7.0800 and 7.1350 for a period.”
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