USD/CNH remains week and risks a drop to 6.7660 – UOB

USD/CNH keeps the negative outlook unaltered and could drop to the 6.7660 level in the next weeks.

Key Quotes

24-hour view: “While we expected USD to weaken yesterday, we were of the view that it ‘could drift lower’ and ‘the month-to-date low at 6.8143 is unlikely to come under threat’. However, USD plummeted to a low of 6.8057 before extending its decline upon opening this morning. In view of the solid improvement in momentum, further USD weakness would not be surprising even though the next major support at 6.7660 is likely out of reach for today. On the upside, 6.8150 is expected to be strong enough to cap any intraday USD strength.”

Next 1-3 weeks: “Yesterday (14 Sep, spot at 6.8300), we highlighted that ‘as long as 6.8550 (‘strong resistance’ level previously at 6.8800) is intact, there is still a slim chance that USD could push lower towards the support at 6.8000’. However, the speed of the subsequent decline was not exactly expected as USD plummeted to 6.8057 before cracking 6.8000 just a while ago. The sudden surge in momentum indicates that the negative phase that started in mid-August has received a new lease of life. From here, the next level to focus on is at 6.7660 followed closely by 6.7500. Overall, the current negative phase is deemed as intact as long as 6.8300 is not taken out (‘strong resistance’ level was at 6.8550 yesterday).”

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