According to FX Strategists at UOB Group, USD/CNH could slip back to the 6.4410 level in the next weeks amidst the renewed downward momentum.
Key Quotes
24-hour view: “Our view for a ‘stronger USD’ was incorrect as it fell to 6.4678 during NY hours before extending its decline this morning. Strong downward momentum suggests USD could weaken further to 6.4550. The next support at 6.4410 is likely out of reach. Resistance is at 6.4720 followed by 6.4790.”
Next 1-3 weeks: “We have held a negative view in USD for more than 2 weeks now. In our latest narrative from Tuesday (27 Apr, spot at 6.4800), we highlighted that ‘the prospect for further USD weakness is not high but only a break of 6.5050 would indicate that weakness in USD has come to an end’. We did not anticipate the ease by which USD cracked the solid support at 6.4700 yesterday. The boost in downward momentum could lead to further USD weakness towards 6.4410. Overall, the negative phase is deemed intact as long as USD does not move above 6.4900 (‘strong resistance’ level previously at 6.5050).”
