Further weakness seen around USD/CNH – UOB

Pablo Piovano FXStreet

FX Strategists at UOB Group remain bearish on the USD/CNH in the short-term horizon.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘conditions are oversold and any weakness in USD could be limited to a test of 6.4000’. However, USD rebounded strongly from 6.4225 (high of 6.4571). The combination of oversold conditions and waning momentum suggest that the current movement is part of a consolidation phase. For today, USD is likely to trade sideways between 6.4200 and 6.4600.”

Next 1-3 weeks: “While our expectation for USD to weaken was correct, we did not quite anticipate the pace of the decline as it dropped sharply to a low of 6.4127. As highlighted yesterday (05 Jan, spot at 6.4500), the next support is at 6.4300 followed by 6.4000. In view of the vastly improved momentum, a break of 6.4000 would not be surprising and would open up the way for a move lower to 6.3800. All in, USD is expected to remain weak as long as it does not move above 6.4950 (‘strong resistance’ level was at 6.5100 yesterday).”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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