A drop below 6.8490 should be indicative that a visit to 6.9000 in USD/CNH could be running out of steam in the near term, comment Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.
Key Quotes
24-hour view: “We expected USD to trade sideways between 6.8650 and 6.8880 yesterday. However, USD dropped to a low of 6.8548 before settling at 6.8586 (-0.18%). Despite the drop, there is no marked increase in downward momentum and USD is unlikely to weaken much further. Today, USD is more likely to trade in a range, expected to be between 6.8530 and 6.8800.”
Next 1-3 weeks: “We have expected USD to strengthen since early this month. After USD exceeded our previous target of 6.8800, we highlighted last Friday (17 Feb, spot at 6.8780) that ‘the outlook for USD remains positive and the focus is at 6.9000’. Since then, USD has not been able to make any headway on the upside. Upward pressure has waned somewhat but only a break of 6.8480 (no change in ‘strong support’ level) would indicate that USD is not advancing further to 6.9000.”
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