USD/CNH: Strong support levels at 7.2420 and 7.2350 may stall the fall– UOB Group

US Dollar could edge lower vs Chinese Yuan (CNH), but there is a pair of strong support levels at 7.2420 and 7.2350. In the longer run, failure to hold below 7.2300 has diminished the likelihood of further USD decline, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

The likelihood of further USD decline seems deminished

24-HOUR VIEW: "On Tuesday, USD fell to a low of 7.2264 before rebounding strongly. Yesterday (Wednesday), when USD was at 7.2550, we noted that 'the rebound gained some momentum.' We were of the view that 'there is a chance for USD to test the strong resistance at 7.2705.' Our view was correct as USD rose to 7.2703, pulling back to close largely unchanged at 7.2532 (-0.02%). This time around, the pullback has resulted in a slight increase in downward momentum. Today, USD could edge lower, but there are a pair of strong support levels at 7.2420 and 7.2350. Resistance levels are at 7.2570 and 7.2660."

1-3 WEEKS VIEW: "Last Friday (21 Feb, spot at 7.2400), we indicated that 'to continue to decline, USD must break and remain below 7.2300.' After USD fell to 7.2264 and rebounded, we indicated yesterday (25 Feb, spot at 7.2550) that “the failure to hold below 7.2300 has diminished the likelihood of further decline. Our view remains unchanged. Overall, only a breach of 7.2705 (no change in ‘strong resistance’ level) would indicate that the weakness in USD from the middle of the month has stabilised."