USD/CNH: Extra consolidation remains on the cards – UOB

In the view of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, USD/CNH is expected to keep the 6.8500-6.9600 trading range unchanged for the time being.

Key Quotes

24-hour view: “Last Friday, we indicated that ‘the price actions are likely part of a broad consolidation range” and we expected USD to ‘trade between 6.8800 and 6.9300’. While our view for USD to consolidate was not wrong, it traded within a narrower range than expected (6.8910/9.229). Momentum indicators are mostly flat and further consolidation appears likely. Expected range for today, 6.8900/6.9250.”

Next 1-3 weeks: “After USD plunged sharply to 6.8642, we held the view that ‘there is room for USD to weaken further but any decline is likely to face solid support at 6.8400’. USD has not been able to make any further headway on the downside and in our update from last Friday (03 Feb, spot at 6.9050), we indicated that ‘the chance of a decline to 6.8400 has diminished’. USD subsequently traded in a quiet manner. The price actions appear to be part of an on-going consolidation phase and USD is likely to trade in a broad range of 6.8500/6.9600 for now.”