US Dollar (USD) is expected to trade in a sideways range between 7.2350 and 7.2650 vs Chinese Yuan (CNH). In the longer run, to continue to decline, USD must break and remain below 7.2300, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD must break and remain below 7.2300 to continue to decline
24-HOUR VIEW: "After USD dropped sharply last Thursday, we indicated on Friday that 'the steep selloff seems excessive, and USD is unlikely to decline much further.' We expected USD to 'trade between 7.2300 and 7.2580.' USD subsequently traded sideways between 7.2339 and 7.2596, closing higher by 0.25% at 7.2540. Further sideways trading seems likely, probably between 7.2350 and 7.2650."
1-3 WEEKS VIEW: "We have expected USD to decline since early last week. After USD fell and almost reach our technical target of 7.2300 last Thursday (low has been 7.2314), we highlighted on Friday that 'while we continue to expect USD to decline, it must break and remain below 7.2300 before further weakness is likely.' There is no change in our view. On the upside, a breach of 7.2800 (no change in ‘strong resistance’ level from last Friday) would indicate that USD is not ready to break below 7.2300."
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