Further selling pressure appears likely in USD/CNH in the next weeks, note UOB Group’s Economist Lee Sue Ann and Market Strategist Quek Ser Leang.
24-hour view: “Yesterday, we expected USD to ‘trade sideways within a range of 6.7690/6.8000’. USD subsequently rose to a high of 6.7975, dropped to 6.7629 before closing at 6.7676 (-0.28%). Downward momentum is beginning to build and the risk for USD today is to the downside. While a break of the major support at 6.7500 would not be surprising, the next support at 6.7000 is unlikely to come into view. On the upside, a breach of 6.7920 (minor resistance is at 6.7800) would indicate that the current downward pressure has eased.”
Next 1-3 weeks: “There is not much to add to our update from Tuesday (10 Jan, spot at 6.7850). As highlighted, USD is likely to continue to weaken and a break of 6.7500 will shift the focus to 6.7000. Overall, only a breach of 6.8250 (‘strong resistance’ level was at 6.8350 yesterday) would indicate that the USD weakness that started last week has ended.”