USD/CNH: Set to slide and test 7.0980 – UOB Group
|Price action continues to suggest further US Dollar (USD) weakness, even though it is too early to determine if the long-term support near 7.0980 is within reach, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
USD pushes towards the 7.0980 support
24-HOUR VIEW: “We did not anticipate the sharp selloff in USD last Friday (we were expecting sideways trading). The decline is severely oversold, and while further weakness is not ruled, the support at 7.1100 is unlikely to come under threat. Resistance is at 7.1650; a breach of 7.1900 would mean that the weakness has stabilised.”
1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (01 Aug, spot at 7.2200), wherein ‘short-term downward momentum is picking up, and the risk of USD breaking below 7.2037 is increasing.’ We indicated that ‘the risk of USD breaking clearly below 7.2037 will remain intact as long as 7.2600 (‘strong resistance’ level) is not breached.’ While USD subsequently rebounded (high of 7.2579), we indicated last Friday that we ‘will continue to hold the same view for now.’ USD then not only broke below 7.2037, but also plunged sharply, reaching a low of 7.1415. The price action continues to suggest further USD weakness, even though it is too early to determine if the long-term support near 7.0980 is within reach. On the upside, the ‘strong resistance’ level has moved lower to 7.2200 from 7.2600.”
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