USD/CNH: Downside bias gathers traction – UOB
|A deeper retracement in USD/CNH is likely on a breach of 6.4200, commented FX Strategists at UOB Group.
Key Quotes
24-hour view: “Yesterday, we held the view that USD ‘could retest the 6.4300 level before a more sustained rebound can be expected’. While our view for USD to move lower was not wrong, USD dropped to 6.4251 before recovering slightly. Downward pressure has eased somewhat but there are no signs that USD is ready for a sustained recovery. Overall, USD is likely to consolidate and trade sideways at these lower levels, expected to be within a 6.4240/6.4420 range.”
Next 1-3 weeks: “Our latest narrative was from Monday (13 Sep, spot at 6.4445) where we held the view that the outlook for USD remains mixed and it could trade within a 6.4240/6.4800 range. USD dropped to within several pips of 6.4240 yesterday (low of 6.4251) before rebounding slightly. Downward momentum is beginning to build but USD has to close below 6.4200 before a sustained decline can be expected. The odds for USD to close below 6.4200 are relatively high as long as USD does not move above 6.4540 (‘strong resistance’ level) within these couple of days. Looking ahead, a daily closing below 6.4200 would indicate that USD could weaken further to 6.4000.”
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