UOB Group’s FX Strategists noted USD/CNH is expected to keep the side-lined theme between 6.4400 and 6.5000 in the next weeks.
24-hour view: “Our expectation for USD to ‘trade sideways’ yesterday was incorrect as it dropped sharply to 6.4615 before settling on a soft note at 6.4637 (-0.38%). Strong downward momentum suggests that further USD weakness would not be surprising. However, the major support at 6.4500 is unlikely to come into the picture (there is another support at 6.4580). Resistance is at 6.4730 followed by 6.4800.”
Next 1-3 weeks: “We highlighted yesterday that the ‘current movement is viewed as part of a consolidation and USD is likely to trade sideways for now’. We added, ‘looking ahead, the upside risk appears to be greater but USD has to close above 6.5000 before a sustained advance can be expected’. USD subsequently dropped sharply and took out the support at 6.4680. The price actions suggest that USD is still in a consolidation and it could USD could trade sideways between 6.4400 and 6.5000 for now.”