USD/CNH: Downside momentum improves further – UOB

USD/CNH could slip back to the 6.4400 level and below in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for USD to ‘trade within a 6.4600/6.4950 range’ was wrong it plummeted to 6.4397 before closing on a weak note at 6.4564 (-0.30%). The rapid drop is oversold and while there is room for USD to test 6.4350, a sustained decline below this level is unlikely. Resistance is at 6.4650 followed 6.4770.”

Next 1-3 weeks: “Last Friday (29 Jan, spot at 6.4750), we highlighted that further USD strength is unlikely. We added, USD ‘is more likely to trade sideways within a broad range 6.4400/6.5500’. USD subsequently dropped to a low of 6.4397. Downward momentum is beginning to improve but USD has to close below 6.4400 before a move towards 6.4130 can be expected. At this stage, the prospect for such a move is not high but it would remain intact as long as it does not move above 6.4900.”