USD/CNH: A breach of 7.2000 to turn the USD upwards – UOB Group

FXStreet Insights Team FXStreet

Further US Dollar (USD) weakness is not ruled out, but the low near 7.0635 is solid support now. Only a breach of 7.2000 would mean that the weakness has stabilised, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann notes.

Bulls push towards 7.2000

24-HOUR VIEW: “USD plunged to 7.0636 on Monday and then snapped back to close at 7.1350. Yesterday (Tuesday), we indicated that ‘the rebound in severely oversold conditions suggests instead of continuing to decline, USD is likely to trade in a 7.1100/7.1700 range.’ USD subsequently traded between 7.1339/7.1650, closing on a firm note at 7.1619 (+0.38%). The slightly firmed underlying tone suggests USD is likely to edge higher today. However, any advance is unlikely to break clearly above 7.1800. On the downside, support levels are at 7.1450 and 7.1350.”

1-3 WEEKS VIEW: “After USD plunged to 7.0636 on Monday and then rebounded, we indicated yesterday (06 Aug, spot at 7.1400) that ‘while downward momentum has slowed somewhat, only a breach of 7.2000 (no change in ‘strong resistance’ level) would mean that the weakness has stabilised.’ We added, ‘until then, further USD weakness is not ruled out, but the low near 7.0635 is solid support now.’ Our view remains unchanged.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD struggles for direction aroun 1

EUR/USD is keeping its range at around 1.1800 in the European trading hours on Thursday. The pair awaits the European Central Bank interest rate decision for fresh impetus after the Eurozone inflation declined well below the central bank's 2% target.

GBP/USD flirts with two-week lows near 1.3570

GBP/USD adds to Wednesday’s pullback and recedes to the area of two-week troughs well south of the 1.3600 level on Thursday. The firmer tone in the Greenback and the dovish hold from the BoE keep the British Pound on the defensive for now.

Gold resumes the decline, still below $5,000 post-ECB

Gold partially reverses its recent two-day rebound, facing fresh downside impulse and always below the key $5,000 mark per troy ounce. The stronger US Dollar continues to weigh on the precious metal, while declining US Treasury yields are expected to limit the decline somehow.