USD/CNH still faces some downside pressure – UOB

A deeper pullback is expected once USD/CNH clears 6.4240, commented FX Strategists at UO Group.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could retest the 6.4230 level before stabilization can be expected’. Our expectations did not materialize as USD dropped to 6.4254 before closing little changed at 6.4289 (-0.08%). Downward momentum is beginning to improve and USD could weaken to 6.4180 but it is left to be seen if it could maintain a foothold below this level (next support is at 6.4100). Resistance is at 6.4300 followed by 6.4350.”

Next 1-3 weeks: “Our view from last Thursday (14 Oct, spot at 6.4340) still stands. As highlighted, downward momentum is beginning to build but USD has to close below 6.4240 before a sustained decline can be expected (next support is at 6.4100). The chance for USD to close below 6.4240 is quite high as long as it does not move above the ‘strong resistance’ level at 6.4450 (level previously at 6.4540).”