USD/CNH: DOWNWARD PRESSURE COULD ACCELERATE BELOW 7.2700 – UOB
USD/CNH risks a deeper retracement once 7.2700 is cleared, suggest UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.
Key Quotes
24-hour view: Yesterday, we held the view that USD could retest the 7.2700 level before a more sustained and robust rebound is likely. Our expectations did not materialise as USD traded between 7.2763 and 7.2940. The underlying tone still appears soft, and we continue to see a chance for USD to test 7.2700. In view of the mild downward pressure, a sustained drop below 7.2700 is unlikely (next support is at 7.2500). Resistance is at 7.2880, followed by 7.2980.
Next 1-3 weeks: We continue to hold the same view as Monday (06 Nov, spot at 7.2880). As highlighted, after the sharp drop last Friday, downward momentum is beginning to build. However, USD must break clearly below 7.2700 before further decline is unlikely. The risk of USD breaking clearly below 7.2700 will remain intact as long as it stays below 7.3200 (no change in ‘strong resistance’ level from yesterday). Looking ahead, the next support below 7.2700 is at 7.2500.
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