USD/CNH: 7.0636 is out of reach for now – UOB Group
|Provided that 7.1130 is not breached, the US Dollar (USD) could continue to decline; the likelihood of it reaching 7.0636 is not high. In the longer run, boost in momentum has increased the chance of USD dropping to and potentially breaking below 7.0636, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann notes.
USD continues to decline
24-HOUR VIEW: “The sharp selloff in USD that sent it plunging by 0.52% (NY close of 7.0943) was surprising (we were expecting sideways trading). What is not surprising is the decline has resulted in a strong increase in momentum. Today, provided that 7.1130 (minor resistance at 7.1010) is not breached, USD could continue to decline. That said, the likelihood of it reaching 7.0636, the low registered early this month, is not high. There is another support level at 7.0770.”
1-3 WEEKS VIEW: “On Monday (26 Aug, spot at 7.1100), we indicated that ‘there is potential for USD to decline to the July’s low of 7.0636.’ Yesterday (29 Aug, spot at 7.1290), we indicated that “downward momentum is slowing, and should USD breach 7.1460 (‘strong resistance level’), it would mean that USD is not declining further. USD subsequently sold off sharply, dropping to a low of 7.0859. The boost in momentum has increased the chance of USD dropping to and potentially breaking below 7.0636. Looking ahead, the next level to watch below 7.0636 is 7.0400. On the upside, the ‘strong resistance’ level has moved lower to 7.1350 from 7.1460.”
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