In opinion of FX Strategists at UOB Group, USD/CNH is now likely to navigate within the 6.4480-6.4850 range in the next weeks.
24-hour view: “Our expectation for USD to ‘trade between 6.4670 and 6.4810’ was incorrect as it dropped to 6.4596 before rebounding to close little changed at 6.4659 (-0.09%). Downward momentum has improved a tad and USD could dip towards 6.4560 first before a rebound can be expected. The major support at 6.4480 is not expected to come into the picture. On the upside, a breach of 6.4740 (minor resistance is at 6.4700) would indicate that the downward pressure has eased.”
Next 1-3 weeks: “We highlighted yesterday (05 Jul, spot at 6.4730) that ‘the prospect for USD to move clearly above 6.4950 has diminished considerably’. We added, ‘only a break of 6.4590 would indicate that the upside risk has dissipated’ USD subsequently dropped to within a few pips of 6.4590 (low of 6.4596). While 6.4590 is still intact, upward pressure has dissipated and from here, USD is expected to consolidate and trade between 6.4480 and 6.4850.”
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