USD/CNH could move below the 7.0650 level – UOB

FX Strategists at UOB Group noted the bearish view on USD/CNH and believe it could recede to the 7.0650 level and below.

Key Quotes

24-hour view: “Instead of trading sideways, USD dipped to 7.0759 before recovering. The underlying tone has weakened and from here, a break of the 7.0759 low could lead to further USD weakness to 7.0650. Resistance is at 7.0880 followed by 7.0920.”

Next 1-3 weeks: “The rebound in USD from a low of 7.0370 (Apr 10) touched 7.1087 on 21 Apr and since then, it has not been able to make much headway on the upside. The price action is not out of line from our expectation from 16 Apr (spot at 7.0770) wherein USD ‘has likely moved into a consolidation phase’ and ‘is likely to trade between 7.0450 and 7.1250 for a period’. That said, the underlying tone has weakened and the downside risk is beginning to increase. From here, unless USD can move above 7.1030 within these few days, a break of 7.0650 would improve the prospect of USD moving below 7.0370.”