Further selling pressure could drag USD/CNH to the 7.1100 region in the near term, argue Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
24-hour view: We expected USD to weaken yesterday, but we held the view that 7.2000 is unlikely to come under threat. We did not anticipate the outsized and sharp selloff that sent USD plunging to a low of 7.1631. USD continues to decline in early Asian trade, and the risk is for further USD weakness. In view of the severely oversold conditions, it remains to be seen if the next major resistance at 7.1100 is within reach today (there is a minor support at 7.1300). Resistance is at 7.1750; a breach of 7.1950 would mean that the weakness in USD has likely stabilised.
Next 1-3 weeks: Yesterday (20 Nov, spot at 7.2220), we indicated that USD “must break clearly below 7.0000 before a sustained decline to 7.1800 is likely.” We added, “only a breach of 7.2600 would indicate that the downside risk has eased.” We were surprised by the manner in which USD not only sliced through 7.2000 but also nose-dived to 7.1631. What is unsurprising is that further USD weakness is likely. The next support is near 7.1100, just above the 55-week exponential moving average. On the upside, the ‘strong resistance’ level has moved markedly lower to 7.2200 from 7.2600
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady at around 1.0750 ahead of US CPI
EUR/USD continues to trade sideways near 1.0750. The cautious market mood helps the US Dollar remain steady as investors gear up for crucial macroeconomic data releases and central bank meetings this week, including US CPI on Tuesday, the Fed on Wednesday, and the ECB on Thursday.
GBP/USD finds support above 1.2540
GBP/USD rebounded after finding support at the 1.2540 area and climbed toward 1.2570, on a quiet session. October labor market data from the UK and November inflation data from the US will be released on Tuesday ahead of the Fed's and the BoE's policy meetings.
Gold extends daily slide toward $1,980 Premium
Gold price remains under heavy bearish pressure and trades at its lowest level in nearly three weeks at around $1,980. The benchmark 10-year US Treasury bond yield is up more than 1% on the day, weighing on XAU/USD ahead of this week's key macroeconomic events.
Bitcoin price backtracks to $40,000 as whales move to sell $671 million worth of BTC
Bitcoin price crashed on Monday for the first time in nearly three weeks. The market was expecting a bullish continuation until the Securities & Exchange Commission (SEC) approves a spot BTC ETF in January 2024.
Big week ahead for commodities with FOMC, ECB and BOE in focus – What's next?
The most highly anticipated week of the year and quite possibly the most pivotal moment in monetary policy history is finally here – as central banks from Washington to Frankfurt to London and beyond prepare to deliver their final interest rate decisions of 2023.