USD/CNH: To decline towards 7.0660 – UOB Group
Instead of continuing to weaken, the US Dollar (USD) is likely to trade in a range between 7.1000 and 7.1250. In the longer run, increasing momentum and breach of 7.1000 support level suggests USD is likely to decline further, potentially to 7.0660, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
USD is likely to decline further
24-HOUR VIEW: “After USD gapped lower in early Sydney trade yesterday, we indicated that ‘The sharp drop appears to be running ahead of itself, but there is room for USD to drop further to 7.1000 before stabilisation is likely.’ We did not expect USD to easily break below 7.1000 and plummet to a low of 7.0876. USD rebounded from the low, closing lower by 0.41% at 7.1103. The rebound in oversold conditions suggests that instead of continuing to weaken, USD is likely to trade in a range today, probably between 7.1000 and 7.1250.”
1-3 WEEKS VIEW: “In our most recent narrative from last Friday (01 Nov, spot at 7.1650), we noted that USD ‘is under mild downward pressure.’ We indicated that it ‘it could edge lower, but any decline is expected to encounter solid support at 7.1000.’ In a sudden move yesterday, USD broke below 7.1000, reaching a low of 7.0876. USD closed lower by -0.41% at 7.1103, its biggest one-day drop in six weeks. The increasing downward momentum, combined with the breach of 7.1000, suggests USD is likely to decline further, potentially to 7.0660. To keep the momentum going, USD must remain below 7.1380 (‘strong resistance’ level previously at 7.1480).”
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FXStreet Insights Team
FXStreet
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