USD/CNH: A move to 7.000 emerges on the horizon – UOB

FX Strategists at UOB Group do not discard a probable test of the key support around 7.000 in USD/CNH in the next weeks.

Key Quotes

24-hour view: “The sharp but short-lived overnight drop that hit a low of 7.0400 came as a surprise. The decline appears to be running ahead of itself and further weakness is unlikely for today. USD is more likely to consolidate and trade between 7.0400 and 7.0800.”

Next 1-3 weeks: “We have held the same view since Monday (08 Jun, spot at 7.0800) wherein USD ‘could weaken to 7.0400’. USD briefly touched 7.0400 in overnight trading before rebounding quickly. While oversold short-term conditions could lead to a few days of consolidation first, the negative phase in USD is deemed as intact until 7.0950 is breached (‘strong resistance’ level was previously at 7.1210). Looking ahead, the next support below 7.0400 is at 7.0200 followed by 7.0000.”