Further downside in USD/CNH cannot be ruled out, but the key support at 7.0885 is unlikely to be tested in the immediate term, according to UOB Group FX strategists Quek Ser Leang and Peter Chia. Over the longer horizon, however, the analysts maintain a bearish outlook on the US Dollar (USD), noting that 7.0885 remains the next level to monitor.
USD/CHN remains under pressure
24-hour view:
Following Wednesday’s drop to 7.1107, UOB noted on Thursday that while downward momentum was building, the major support at 7.0990 was likely out of reach. However, the sell-off intensified far more rapidly than expected, with USD/CNH plunging to 7.0918.
While additional weakness is possible, deeply oversold conditions suggest that the next major support at 7.0885 is unlikely to be tested today. Immediate resistance stands at 7.1030, followed by 7.1085.
1–3 weeks view:
UOB reiterated on Wednesday (spot at 7.1110) that USD/CNH had turned negative and that 7.0995 was the key downside level to watch. The pair broke through that threshold much faster than anticipated, reaching 7.0918.
The bank continues to maintain a bearish stance and expects a move toward 7.0885, provided the pair stays below 7.1170 a level now acting as strong resistance.
