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In light of the recent price action, FX Strategists at UOB Group believe USD/CNH could move to the 6.9400 region in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘barring a move above 7.0000, USD is expected to weaken to 6.9575’. Our view was not wrong as USD subsequently dropped to 6.9538 before recovering. The combination of oversold conditions and waning momentum suggests limited downside risk for USD for today. USD is more likely to consolidate and trade sideways, expected to be between 6.9550 and 6.9790.”

Next 1-3 weeks: “We highlighted last Friday (28 Feb, spot at 7.0200) that ‘the risk of a deeper pullback would increase from here unless USD can move and stay above 7.0250 within these few days’. However, the sudden slump of -0.45% (NY close of 6.9780) came as a surprise. From here, the pull-back in USD could extend to 6.9400. The ‘strong resistance’ level has moved lower to 7.0150 from 7.0250.”