US Dollar (USD) is likely to trade in a range between 7.1440 and 7.1630 against Chinese Yuan (CNH). In the longer run, USD view is negative; it could drop to 7.1295, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD view is negative
24-HOUR VIEW: “On Wednesday, USD fell and closed lower at 7.1514, down by 0.25%. Yesterday, when USD was at 7.1500, we stated that ‘the risk for USD remains on the downside.’ However, we indicated that ‘the significant support level at 7.1295 is probably out of reach for now (there is another support level at 7.1400).’ The subsequent price movements did not turn out as we expected. USD briefly dropped to a low of 7.1435 and then recovered to close largely unchanged at 7.1549 (+0.05%). The price movements are likely part of a range trading phase, probably between 7.1440 and 7.1630.”
1-3 WEEKS VIEW: “After maintaining a neutral position on USD for more than a week, we revised our view to negative yesterday (24 Jul, spot at 7.1500). We indicated that USD ‘could drop to 7.1295.’ We will maintain our view provided that USD remains below the ‘strong resistance’ level of 7.1730.”
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