FX Strategists at UOB Group noted USD/CNH is expected to keep navigating the 6.75-6.83 range in the next weeks.
24-hour view: “USD trade between 6.7727 and 6.8006 yesterday, narrower than our expected range of 6.7700/6.8100. The underlying tone has improved somewhat and USD could edge upward from here. That said, any advance is likely limited to a test of the resistance at 6.8100. Support is at 6.7880 followed by 6.7700.”
Next 1-3 weeks: “We have held a negative view in USD since mid-August. In our latest narrative from last Thursday (17 Sep, spot at 6.7520), we indicated that the ‘decline is oversold but outlook for USD remains weak for now’ and we added, ‘pace of any further weakness is likely to be slower and next major support 6.7165 may be out of reach this time round’. Yesterday (21 Sep), USD rebounded strong and touched a high of 6.8080, not far below our ‘strong resistance’ level of 6.8100. While the ‘strong resistance’ is still intact, downward momentum has waned considerably and this coupled with the still oversold conditions suggest that the month-long negative phase has run its course. From here, there is room for the current rebound to extend higher but for now, any advance is viewed as part of broad 6.7500/6.8300 range.”