UOB Group’s FX Strategists see USD/CNH grinding lower to the 6.4015 level in the next weeks.
Key Quotes
24-hour view: “We did not expect the sharp drop in USD to 6.4182 (we were expecting a consolidation). Despite the decline, downward momentum has not improved by much and USD is unlikely to weaken much further. For today, USD is more likely to consolidate and trade between 6.4180 and 6.4380.”
Next 1-3 weeks: “Our view from Monday (17 May, spot at 6.4410) for USD to ‘edge higher’ was proven incorrect as it dropped below our ‘strong support’ level at 6.4200 yesterday (low of 6.4182). Despite the relatively sharp drop, downward momentum has not improved by much. That said, USD could grind lower and test the month-to-date low near 6.4015. At this stage, the prospect for a sustained decline below this level is not high. On the upside, a breach of 6.4460 (‘strong resistance’ level) would indicate that the current mild downward pressure has eased.”