USD/CNH: A drop to 6.6300 should not be ruled out – UOB

USD/CNH remains under pressure and cold extend the decline to 6.6300 in the next weeks, commented FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we expected USD to ‘trade sideways within a range of 6.6550/6.6950’. Our view for sideway-trading was not wrong even though USD traded within a narrower range than expected (6.6563/6.6910). Further sideway-trading appears likely but in view of the slightly softened underlying tone, USD is likely to trade within a lower range 6.6480/6.6880.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (24 May, spot at 6.6685). As highlighted, further USD weakness is not ruled out but deeply oversold shorter-term conditions could lead to a few days of consolidation first. All in, as long as 6.7100 (strong resistance level was at 6.7300 yesterday) is not breached, there is room for USD to weaken further to the next support at 6.6300.”