USD/CNH: Next support at 7.2500 is unlikely to come into view – UOB Group
|Provided that 7.2950 is not breached, there is a chance for US Dollar (USD) to drop below 7.2685 against CNH (Chinese Yuan). The next support at 7.2500 is unlikely to come into view. In the longer run, USD must break and remain below 7.2500 before a sustained decline is likely, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Below 7.2500, a sustained decline is likely
24-HOUR VIEW: "We pointed out yesterday that 'momentum indicators remain flat, and we continue to expect USD to trade in a range between 7.3000 and 7.3200.' However, in a sudden move, USD plunged and reached a low of 7.2685 in late NY trade. Although deeply oversold, the weakness has not stabilised. Today, provided that 7.2950 (minor esistance is at 7.2870) is not breached, there is a chance for USD to dip below the 7.2685 low before stabilisation is likely. The next support at 7.2500 is unlikely to come into view."
1-3 WEEKS VIEW: "We highlighted last Friday (07 Feb, spot at 7.2865) that 'while the outlook remains mixed, the decreasing volatility over the past couple of days suggests USD could trade in a narrower range of 7.2500/7.3300.' Yesterday, USD fell sharply to a low of 7.2685. There has been an increase in momentum, but not enough to indicate the start of a sustained decline. To continue to decline, USD must break and remain below 7.2500. The likelihood of USD breaking clearly below 7.2500 will increase in the next few days as long as 7.3070 is not breached."
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