USD/CNH: Bets for further decline look diminished – UOB

Above 6.9300 could indicate that USD/CNH is unlikely to weaken further, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “Last Friday, we expected USD to consolidate between 6.8850 and 6.9100. We did not anticipate the sharp but brief drop as USD plummeted to 6.8594 before rebounding. Despite the sharp drop, there has been no significant increase in downward momentum and USD is unlikely to weaken much further. Today, USD is more likely to trade between 6.8550 and 6.9000.”

Next 1-3 weeks: “We have expected USD to weaken since early last week. As USD did not make much headway on the downside, in our latest update from last Thursday (16 Mar, spot at 6.8920), we indicated that while the downside risk has decreased, only a break of 6.9300 (no change in ‘strong resistance’ level) would indicate that USD is not weakening further. While there is no change in our view, a breach of 6.9100 (‘strong resistance’ level previously at 6.9300) would indicate that USD is not weakening further. Looking ahead, only a clear break of 6.8350 would indicate that USD is ready to head lower in a more sustained manner.”