USD/CNH: Declines could be relatively limited – UOB Group

FXStreet Insights Team FXStreet

Further US Dollar (USD) weakness appears likely; oversold conditions suggest declines could be relatively limited. In the longer run, sharp decline has resulted in increase in momentum; USD is likely to continue to weaken, potentially to 7.0100, UOB Group FX strategists Quek Ser Leang and Peter Chia note.

USD is likely to continue to weaken, potentially to 7.0100

24-HOUR VIEW: “Levels to watch are 7.0380 and 7.0270. Last Friday, we held the view that ‘there is scope for USD to break below 7.0600, but the next support 7.0500 is unlikely to come into view.’ The anticipated weakness exceeded our expectation as USD plummeted to a low of 7.0387, closing on a weak note at 7.0432 (- 0.41%). While further USD weakness appears likely today, oversold conditions suggest any further decline could be relatively limited. The levels to watch are 7.0380 and 7.0270. To maintain the momentum, USD must remain below 7.0610 with minor resistance at 7.0530.”

1-3 WEEKS VIEW: “We turned negative in USD last Friday (20 Sep, spot at 7.0700), indicating that it ‘is likely to trade with a downward bias towards 7.0500.’ While our view was not wrong, the subsequent sharp selloff that sent it to a low of 7.0387 was surprising. Not surprisingly, the sharp decline has resulted in further increase in downward momentum. USD is likely to continue to weaken, potentially to 7.0100. On the upside, a breach of 7.0770 (‘strong resistance’ was at 7.1100 last Friday) would mean that USD is not weakening further.”

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 near 1.1850, with all eyes on US CPI data

EUR/USD holds losses while keeping its range near 1.1850 in European trading on Friday. A broadly cautious market environment paired with a steady US Dollar undermines the pair ahead of the critical US CPI data. Meanwhile, the Eurozone Q4 GDP second estimate has little to no impact on the Euro.

GBP/USD recovers above 1.3600, awaits US CPI for fresh impetus

GBP/USD recovers some ground above 1.3600 in the European session on Friday, though it lacks bullish conviction. The US Dollar remains supported amid a softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold remains below $5,000 as US inflation report looms

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains in the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.