USD/CNH: Rapidly increasing downward momentum – UOB Group

Bias is tilted to the downside; it is unclear whether US Dollar (USD) can break below 7.1435. In the longer run, rapidly increasing downward momentum indicates USD could drop below 7.1435; it is unclear now if 7.1290 is within reach, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Bias is tilted to the downside

24-HOUR VIEW: "Yesterday, we were of the view that USD 'could edge lower,' but we pointed out that 'given the mild downward pressure, any decline is unlikely to threaten the major support at 7.1435.' We indicated that 'resistance levels are at 7.1600 and 7.1650.' The subsequent price movements did not quite turn out as we expected. USD initially fell sharply, but briefly to 7.1460, rebounded to a high of 7.1655, and then dropped back down to close largely unchanged at 7.1522 (-0.02%). We continue to detect mild downward pressure, but while the bias for today is tilted to the downside, it is unclear whether USD can break clearly below 7.1435. Today’s resistance levels are at 7.1580 and 7.1660."

1-3 WEEKS VIEW: "We turned negative on USD two days ago (26 Aug, spot at 7.1580), indicating that 'the rapidly increasing downward momentum indicates USD could drop below July’s low of 7.1435.' We added, 'it is unclear if the next support at 7.1290 is within reach.' Although USD has not been able to make significant headway on the downside, we will maintain our view as long as 7.1800 (no change in ‘strong resistance’ level) is not breached."