USD/CNH: Risks of further decline remain intact – UOB

FX Strategists at UOB Group noted that the selling pressure in USD/CNH remains well in place for the time being.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could dip below 6.4850 but the next major support at 6.4700 is unlikely to come under threat’. We highlighted that ‘there is another minor support at 6.4800’. USD subsequently dropped to 6.4802 before rebounding. Downward pressure appears to have eased and for today, USD is likely to trade sideways between 6.4830 and 6.5030.”

Next 1-3 weeks: “Two days ago (21 Apr, spot at 6.5000), we indicated that the ‘downside risk in USD remains intact and the next support below 6.4850 is at 6.4700’. USD broke 6.4850 yesterday and dropped to 6.4802. Despite the breach of 6.4850, downward momentum has not improved by much. That said, the risk is still for a lower USD but any weakness is expected to encounter solid support at 6.4700. O the upside, a breach of 6.5200 (no change in ‘strong resistance’ level) would indicate that the weakness in USD that started more than a week ago (see annotations in the chart below) has come to an end.”