FX Strategists at UOB Group said USD/CNH keeps the negative view and stays focused on the 6.8850 level.
Key Quotes
24-hour view: “We indicated yesterday that the ‘rebound is unlikely to be sustained but USD could extend to 6.9310 before a pullback can be expected’. Our expectation was incorrect as USD drifted lower to an overnight low of 6.9050 before extending its decline upon opening this morning. Downward momentum has picked up, albeit not by much. From here, USD could continue to drift lower and while a dip below the Wednesday’s low of 6.8981 would not be surprising, the next support at 6.8850 is likely out of reach for today. Resistance is at 6.9110 followed by 6.9200.”
Next 1-3 week: “On Wednesday (19 Aug, spot at 6.9120), we indicated that USD ‘has moved into a negative phase’ and that ‘the next level to focus on is at 6.8850’. USD subsequently dropped to 6.8981 before rebounding to a high of 6.9263 yesterday (20 Aug). While downward momentum has been dented, our ‘strong resistance’ level at 6.9400 is still intact and we continue to hold the view that USD is in a negative phase. That said, 6.8850 may not come into the picture so soon but a break of this level could potentially lead to a downward acceleration as the next support level of note does not come in until 6.8460.”
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