UOB Group’s FX Strategists noted the likeliness of further weakness in USD/CNH seems to be dwindling in the near-term.
24-hour view: “Yesterday, we expected USD to ‘trade between 6.4650 and 6.4800’. USD subsequently traded within a 6.4688/1.4832 range before closing little changed at 6.4700 (-0.07%). The price actions offer no fresh clues and we continue to expect USD to trade sideways, likely between 6.4620 and 6.4820.”
Next 1-3 weeks: “We have held a negative view in USD since mid-April. In our latest narrative from last Thursday (29 Apr, spot at 6.4650), we highlighted that ‘boost in downward momentum could lead to further USD weakness towards 6.4410’. However, USD has not been able to make much headway to the downside and downward momentum is beginning to wane. From here, a break of 6.4900 (no change in ‘strong resistance’ level) would indicate that the negative phase has ended.”
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