USD/CNH remains side-lined for the time being – UOB

In the view of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia, USD/CNH is expected to keep the 6.8500-6.9500 range in the next few weeks.

Key Quotes

24-hour view: “Our view for USD consolidate last Friday was incorrect as it plunged to a low of 6.9040 in NY trade. While USD could weaken further, oversold conditions suggest a sustained drop below 6.8700 is unlikely (the next support at 6.8500 is unlikely to come under threat). On the upside, a breach of 6.9500 (minor resistance is at 6.9380) would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “We highlighted last Tuesday (07 Mar, spot at 6.955) that USD ‘is likely to trade with an upward bias but any advance is likely to encounter solid resistance at 7.0000’. After USD rose to 6.9960, we indicated last Wednesday (08 Mar, spot at 6.9880) that while the outlook for USD is still positive, it has to break and stay above 7.0000 before further advance to 7.0200 is unlikely. USD dropped sharply on Friday and took out our ‘strong support’ level of 6.9140. The breach of the ‘strong support’ indicates that USD is unlikely to advance further. The outlook is mixed and for the time being, we expect USD to trade in a broad range of 6.8500/6.9500.”