Chinese Yuan: Targeting 6.7200 against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann keep a downside bias on USD/CNH after the pair dipped to 6.7180 and closed near 6.7210. Intraday, they expect any further weakness to be limited within 6.7150–6.7240 and not to break clearly below 6.7150, but on a 1–3 week view they warn that a sustained move under 6.7200 would open 6.7000.

Downside bias with key trigger level

"24-HOUR VIEW: While we highlighted last Friday that “there is a chance for USD to dip below 6.7200”, we pointed out that “given the oversold conditions, any decline should stay within a 6.7180/6.7280 range.” USD subsequently dipped to 6.7180 before recovering slightly to close little changed at 6.7213 (-0.07%). Although the bias remains tilted to the downside, based on the prevailing momentum, any decline is likely part of a lower range of 6.7150/6.7240. In other words, USD is unlikely to break clearly below 6.7150."

"1-3 WEEKS VIEW: We have held a negative USD view since early this month (as annotated in the chart below). Last Friday (21 Aug, spot at 6.7240), we highlighted that “downward momentum continues to increase, and looking ahead, if USD breaks and holds below 6.7200, the next level to watch is 6.7000.” USD subsequently fell to a low of 6.7180 before closing at 6.7213 (-0.07%). We will continue to hold the same view as long as 6.7340 (‘strong resistance’ previously at 6.7380) is not breached."

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