US Dollar (USD) could continue to weaken vs Chinese Yuan (CNH); the major support at 7.1700 is likely out of reach for now. In the longer run, renewed downward momentum suggests 7.1700 is back in sight, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Major support at 7.1700 is likely out of reach for now
24-HOUR VIEW: “After edging higher for a few days, USD plummeted and closed at 7.1993 yesterday, down by 0.58%. The sharp selloff seems overdone, but with no signs of stabilisation just yet, USD could continue to weaken. However, the major support at 7.1700 is likely out of reach for now (there is another support level at 7.1840). Resistance levels are at 7.2100 and 7.2180.”
1-3 WEEKS VIEW: “On 06 May (spot at 7.2150), we indicated that USD ‘could range-trade for a few days before resuming its decline, and the level to watch is 7.1700.’ As the downward momentum faltered, we indicated on 09 May (spot at 7.2400) that ‘downward momentum is slowing rapidly, and a breach of 7.2600 (‘strong resistance’ level) would mean that USD is likely to trade in a range instead of declining.’ USD did not breach 7.2600. Yesterday, it fell to a low of 7.1926. The renewed downward momentum suggests 7.1700 could be back in sight. On the upside, the ‘strong resistance’ level has moved lower to 7.2420 from 7.2600.”