Chinese Yuan: Range-bound consolidation outlook against US Dollar – UOB

United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann discuss recent volatility in USD/CNH after a sharp rebound and subsequent drop. Their short-term view now expects the Dollar to trade within defined intraday and 1–3 week ranges, while noting that downward momentum has increased but remains insufficient to signal a sustained decline. A longer-term recovery requires key technical resistance to be broken.

Analysts see contained downside risk

"24-HOUR VIEW: USD rose sharply to a high of 6.7327 last Friday before closing on a firm note at 6.7319 (+0.18%). Yesterday, we pointed out that “the rapid rise appears to be overdone, and USD is unlikely to rise much further.” We held the view that USD “is more likely to trade in a range between 6.7230 and 6.7330.” We did not anticipate the sharp increase in volatility as USD rose to 6.7338 and then plunged to a low of 6.7177. We are not able to derive much from the volatile price action. Today, USD could trade between 6.7120 and 6.7250."

"1-3 WEEKS VIEW: After holding a negative USD view since early this month, we revised our view to slightly positive yesterday (31 Aug, spot at 6.7290). We highlighted that “the month-long USD weakness has stabilised, and the sharp rebound has scope to test 6.7400.” We pointed out that “it is too early to determine whether USD can break clearly above this level.” Our view was invalidated quickly as USD fell sharply and broke our ‘strong support’ level at 6.7190 with a low of 6.7177. Downward momentum has increased, but it is not sufficient to indicate a continued decline. From here, USD could edge lower, but based on the prevailing momentum, it is likely to stay contained within a 6.7050/6.7300 range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)