USD/CNH: Further weakness on the cards – UOB

According to FX Strategists at UOB Group, USD/CNH risks further decline in the next weeks.

Key Quotes

24-hour view: “Our expectation for USD to ‘test 6.5180 first before stabilizing’ did not materialize as it traded between 6.5228 and 6.5440 before closing little changed at 6.5270 (-0.07%). The current movement is viewed as part of a consolidation and USD is likely to trade between 6.5200 and 6.5400 for today.”

Next 1-3 weeks: “Yesterday, we noted that USD ‘is under mild downward pressure and a daily closing below 6.5400 could lead to weakness towards 6.5300’. We did not anticipate the subsequent sharp decline as USD dropped to 6.5255 before closing at 6.5317. The rapid improvement in downward momentum is expected to lead to further USD weakness even though 6.5000 may not come into the picture so soon. Overall, the current downward pressure in USD is deemed intact as long as it does not move above 6.5530 (‘strong resistance’ level was at 6.5630 yesterday).”