UOB Group’s FX Strategists noted USD/CNH is expected to trade within a consolidative range in the next weeks.
Key Quotes
24-hour view: “We highlighted yesterday that ‘there is room for USD to edge lower to 6.4870’. We added, ‘any weakness is not expected to challenge the next support at 6.4730’. While our view was not wrong, the subsequent decline was stronger than expected as USD dropped to 6.4769. Despite the stronger than expected decline, downward momentum has not improved by as much. That said, USD could edge lower but is unlikely to challenge the support at 6.4580 (6.4730 is still quite a strong level). Resistance is at 6.4900 followed by 6.5000.”
Next 1-3 weeks: “We highlighted yesterday (11 Mar, spot at 6.5020) that ‘the 3-week positive phase has come to an end’ and we expected USD to ‘trade between 6.4730 and 6.5360’. We did not quite anticipate the rapid manner by which USD is approaching the bottom of the range (overnight low of 6.4769). In view of the improvement in shorter-term downward momentum, USD could move below 6.4730. That said, only a clear break of 6.4580 would increase the risk of a sustained decline in USD.”
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