The continuation of the selling pressure appears on the cards for USD/CNH in the short-term horizon, argue Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
24-hour view: We expected USD to consolidate in a range of 7.2750/7.3080 last Friday. However, it dropped briefly to 7.2596 in Asian trade, rebounded, and traded sideways for the rest of the sessions. The price actions still appear to be consolidative. Today, we expect USD to trade between 7.2600 and 7.2900.
Next 1-3 weeks: Our latest narrative was from last Thursday (14 Sep, spot at 7.2740), wherein “downward momentum has increased, and USD could break below 7.2600.” We indicated the next support is at 7.2390. On Friday, USD dropped slightly below 7.2600 (low of 7.2596) before rebounding. We continue to expect USD to weaken, even though the major support at 7.2390 might now come into view so soon. Overall, only a breach of 7.3150 (‘strong resistance’ level previously at 7.3200) would indicate that the downward pressure that started early last week has faded.
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