USD/CNH: Likely to consolidate between 7.1150 and 7.1340 – UOB Group
|US Dollar (USD) is likely to consolidate between 7.1150 and 7.1340. In the longer run, USD remains negative, and it could drop and potentially break below 7.1000, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
USD remains negative
24-HOUR VIEW: "Following the sharp drop in USD that reached a low of 7.1185, we indicated last Friday that USD 'could test 7.1100 before stabilization can be expected.' We added, 'the next support at 7.1000 is unlikely to come into view.' The subsequent price action did turn out as we expected, with USD trading in a range of 7.1160/7.1318. USD closed marginally higher at 7.1230, up by 0.03%. The price movements are likely part of a consolidation phase. Today, we expect USD to trade between 7.1150 and 7.1340."
1-3 WEEKS VIEW: "We turned negative on USD early last week (see annotations in the chart below). Tracking the subsequent price movements, we indicated last Friday (29 Aug, spot at 7.1200) that USD 'remains negative, and it could drop and potentially break below 7.1000.' There is no change in our view. Overall, only a breach of 7.1500 (‘strong resistance’ previously at 7.1550) would indicate that USD is not ready to move below 7.1000."
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