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FX Strategists at UOB Group still believe that if USD/CNH breaches 6.9645 would be exposed to further retracements in the near-term.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘could dip below 6.9755 but next support at 6.9645 is unlikely to come into the picture’. While USD did dip below 6.9755, it only managed to touch a low of 6.9740. The underlying tone has weakened further and for today, USD could dip below 6.9645 but a sustained decline below this level is unlikely. Next support is at 6.9580. Resistance is at 6.9820 followed by 6.9880.”

Next 1-3 weeks: “In our latest update from last Tuesday (28 Jul, spot at 6.9900), we highlighted that ‘breach of 6.9750 would indicate end of correction phase and increase risk of USD moving below the month-to-date low of 6.9645’. Since then, USD has traded mostly sideways and downward momentum has barely improved. That said, looking forward, the downside risk still appears to be higher but USD has to crack and close below the July’s low of 6.9645 before a sustained weakness can be expected.”