USD/CNH could now slip back to 6.3230 – UOB

The consolidative phase in USD/CNH seems over and the cross could now grind lower to the 6.3230 level in the next weeks, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “After trading sideways for several days, the sudden lurch lower in USD came as a surprise. While the sharp and swift drop appears to be running ahead of itself, the weakness in USD has not stabilized. From here, barring a move above 6.3490 (minor resistance is at 6.3460), USD could weaken further even though Jan’s low near 6.3230 is unlikely to come under threat for now (there is another support at 6.3300).”

Next 1-3 weeks: “We have held the same view since last Monday (07 Feb, spot at 6.3600) where USD is in a consolidation phase and is expected to trade between 6.3400 and 6.3805. After more than a week, USD staged a sudden and sharp drop as it plummeted to a low of 6.3329 during NY session. The consolidation phase has ended and USD is likely to head lower and the level to monitor is at the Jan’s low near 6.3230. Only a break of the ‘strong resistance’ level, currently at 6.3585 would indicate that that our view for a lower USD is wrong. On a shorter-term note, 6.3490 is already quite a strong resistance level.”