USD/CNH: Downside pressure looks mitigated – UOB
|The continuation of the downward bias in USD/CNH appears to have run out of steam as of late, comment UOB Group’s Markets Strategist Quek Ser Leang and Economist Lee Sue Ann.
Key Quotes
24-hour view: Yesterday, we expected USD to trade in a range between 7.2770 and 7.2950. Instead of trading in a range, USD rose to a high of 7.3021. Upward momentum is beginning to improve, and the bias for USD is tilted to the upside. As upward momentum is only beginning to build, any advance is unlikely to reach the major resistance at 7.3320. Note that there is another resistance at 7.3200. On the downside, a breach of 7.2880 (minor support is at 7.2960) would indicate that the upward bias has faded.
Next 1-3 weeks: Our latest narrative was from Monday (06 Nov, spot at 7.2880), wherein, after the sharp drop last Friday, downward momentum is beginning to build, but USD must break clearly below 7.2700 before further decline is unlikely. Yesterday, USD rebounded to a high of 7.3021. While our ‘strong resistance’ level at 7.3200 has not been breached yet, downward momentum has more or less faded. The current price action is likely part of a sideways trading phase, likely between 7.2700 and 7.3320.
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