USD/CNH: A move towards 7.1300 is possible – UOB Group

FXStreet Insights Team FXStreet

The US Dollar (USD) could continue to decline; the support at 7.1300 is likely out of reach. While downward momentum has been boosted, it is unclear at this time if it is sufficiently enough for USD to break below 7.0635, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Bears may try to test 7.1300

24-HOUR VIEW: “Our view of sideways trading yesterday was incorrect. Instead of trading sideways, USD plunged, closing sharply lower by 0.41% (7.1490). While severely oversold, USD could continue to decline today. However, the support at 7.1300 is likely out of reach (there is another support level at 7.1410). Resistance is at 7.1580; a breach of 7.1660 would suggest that the weakness has stabilised.”

1-3 WEEKS VIEW: “We have held a negative USD view since late last month (as annotated in the chart below). After USD fell sharply to 7.0636 and rebounded, in our update from last Tuesday (06 Aug, spot at 7.1400), we highlighted that ‘while further USD weakness is not ruled out, the low near 7.0635 is solid support now.’ We added, ‘a breach of 7.2000 would mean that the weakness has stabilised.’ USD subsequently traded sideways, and we noted two days ago (12 Aug, spot at 7.1770) that ‘downward momentum is fading, and the likelihood of USD breaking below 7.0635 has diminished.’ Yesterday, USD fell sharply by 0.41% (7.1490). While downward momentum has been boosted, it is unclear at this time if it is sufficiently enough for USD to break below 7.0635. Nevertheless, the bias remains on the downside as long as 7.1850 (‘strong resistance’ level previously at 7.2000) is not breached.”

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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.

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