According to UOB Group’s FX Strategists, USD/CNH faces extra downside in the short-term horizon.
24-hour view: “Our expectation for USD to ‘trade within a broad range of 6.4100/6.4400’ yesterday was incorrect as it dropped to 6.4039 before rebounding quickly. Downward momentum appears to have eased and this coupled oversold condition suggests limited downside risk from here. For today, USD is more likely to consolidate and trade between 6.4100 and 6.4360.”
Next 1-3 weeks: “We continue to hold the same view as from yesterday (10 May, spot at 6.4220). As highlighted, the risk for USD is still clearly on the downside but in view of the deeply oversold shorter-term conditions, the year-to-date low near 6.3980 may not come into the picture so soon. The downside risk is deemed intact as long as USD does not move above 6.4640 (no change in ‘strong resistance’ level).”