USD/CNH: To trade lower, but not below 7.0600 – UOB Group

It is not unreasonable to expect further USD weakness, particularly when there are no significant support levels close by, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.

Short-term levels to monitor are 6.9700 and 6.9400

24-HOUR VIEW: “Two days ago, USD plummeted. Yesterday, we indicated that ‘further sharp declines appear likely, and support is at 6.9700.’ USD then dropped to 6.9952 and then rebounded strongly. The rebound lacks momentum, and instead of continuing to advance, USD is more likely to trade in a 7.0180/7.0430 range today.”

1-3 WEEKS VIEW: “Our update from yesterday (25 Sep, spot at 6.9990) remains valid. As highlighted, after the recent sharp drop, it is not unreasonable to expect further USD weakness, particularly when there no significant support levels close by. Meanwhile, the short-term levels to monitor are 6.9700 and 6.9400. Overall, we will continue to expect a lower USD provided that 7.0600 (no change in ‘strong resistance’ level) is not breached.”