USD/CNH remains tilted to the downside – UOB
In opinion of FX Strategists at UOB Group, USD/CNH is seen potentially grinding lower to the 6.4410 level in the next weeks.
Key Quotes
24-hour view: “Our expectation for USD to ‘weaken further to 6.4550’ did not materialize as it traded between 6.4615 and 6.4757. The recent weakness appears to have stabilized somewhat but there is still scope for USD to move lower to 6.4550 first before a recovery can be expected. The major support at 6.4410 is not expected to come into the picture. Resistance is at 6.4720 followed by 6.4790.”
Next 1-3 weeks: “We have held a negative view in USD for more than 2 weeks now. In our latest narrative from Tuesday (27 Apr, spot at 6.4800), we highlighted that ‘the prospect for further USD weakness is not high but only a break of 6.5050 would indicate that weakness in USD has come to an end’. We did not anticipate the ease by which USD cracked the solid support at 6.4700 yesterday. The boost in downward momentum could lead to further USD weakness towards 6.4410. Overall, the negative phase is deemed intact as long as USD does not move above 6.4900 (‘strong resistance’ level previously at 6.5050).”
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