USD/CNH: Downside momentum improved – UOB

In opinion of FX Strategists at UOB Group, USD/CNH risks extra losses on a breakdown of 6.4240 in the near term.

Key Quotes

24-hour view: “The sharp drop in USD to 6.4288 last Friday came as a surprise (we were expecting USD to trade within a range of 6.4430/6.4680). The rebound from the low amid oversold conditions suggest that USD is unlikely to weaken further. For today, USD is likely to trade between 6.4300 and 6.4600.”

Next 1-3 weeks: “Last Friday (01 Oct, spot at 6.4550), we indicated that the outlook is mixed and we expected USD to trade between 6.4300 and 6.4800 for a period of time. USD subsequently dropped below 6.4300 (low of 6.4288) before rebounding quickly. While downward momentum has improved somewhat, it appears too soon to expect a sustained decline in USD. Looking ahead, USD has to close below 6.4240 before a sustained decline can be expected.”