US Dollar (USD) is expected to trade between 7.2070 and 7.2370 vs Chinese Yuan (CNH). In the longer run, USD could range-trade for a few days before resuming its decline; the level to watch is at 7.1700, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD can range-trade for a few days
24-HOUR VIEW: “Yesterday, we noted that ‘the outlook for USD is mixed’ and we expected it to ‘trade in a 7.1900/7.2300 range.’ Our view was not wrong, as USD traded between 7.1895 and 7.2298. The price action provides no fresh clues. Today, we expect USD to trade between 7.2070 and 7.2370.”
1-3 WEEKS VIEW: “Two days ago, 06 May, when USD was at 7.2150. we highlighted that ‘although a further decline remains possible, the deeply oversold short-term conditions suggest that the USD may range-trade for a few days before resuming its decline.’ We added, ‘the level to watch is at 7.1700.’ There is no change in our view. Overall, only a breach of 7.2600 (no change in ‘strong resistance’ level) would mean that USD is not declining further.”