USD/CNH: A deeper pullback loses traction – UOB

Prospects of further decline in USD/CNH could be losing traction, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to ‘continue to consolidate’ and expected a range of 6.5900/6.6350. While USD consolidated, the registered range was narrower than expected (6.6018/6.6348). The quiet price actions offer no fresh clues and we continue to expect USD to trade sideways for now. Expected range for today, 6.5900/6.6300.”

Next 1-3 weeks: “In our latest narrative from Monday (09 Nov, spot at 6.5830), we indicated that ‘the outlook for USD is still weak and the next support is at 6.5300’. USD subsequently dropped to 6.5476 before snapping back up. Downward momentum has eased considerably and the odds for further USD weakness have diminished. However, only a break of 6.6600 (no change in ‘strong resistance’ level) would indicate that the current downward pressure has eased.”