USD/CNH still faces downside risks – UOB

Pablo Piovano FXStreet

FX Strategists at UOB Group still believe USD/CNH could edge lower to the 6.80 region in the next weeks.

Key Quotes

24-hour view: “Our expectation for USD to ‘test the 6.8530 resistance’ last Friday did not materialize as it eased off from a high of 6.8499 before trading mostly sideways. The underlying tone has softened but any weakness from here is viewed as a lower trading range of 6.8250/6.8450 (a sustained decline below 6.8250 is not expected).”

Next 1-3 weeks: “Our latest narrative was from last Wednesday (02 Sep, spot at 6.8355) wherein ‘oversold short-term conditions could lead to consolidation first but overall risk is for further USD weakness towards 6.8000’. Our view was not wrong as USD traded in a relatively quiet manner for the past few days. While downward momentum has eased somewhat, the negative phase in USD that started in mid-August still has chance to push lower towards the round-number support level of 6.8000. Only a move above 6.8800 (no change in ‘strong resistance’ level) would indicate the negative phase in USD has run its course.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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