Room for US Dollar (USD) to continue to edge lower against Chinese Yuan (CNH), but any decline is unlikely to reach 7.1450. In the longer run, there has been a tentative buildup in momentum; USD is likely to edge lower toward 7.1450, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
A tentative buildup in momentum
24-HOUR VIEW: “Following USD price action two days ago, we highlighted the following yesterday: ‘Despite the quiet price action, there has been a slight increase in downward momentum. Today, USD could edge lower, but any decline is unlikely break the major support at 7.1620. Resistance levels are at 7.1800 and 7.1900.’ Our view was not wrong, as USD rose to 7.1790 and then dropped to a low of 7.1620. Although there has been no significant increase in downward momentum, we continue to see room for USD to edge lower, but given the current momentum, any decline is unlikely to reach 7.1450. Note that there is another support level at 7.1550. Today, resistance levels are at 7.1750 and 7.1800.”
1-3 WEEKS VIEW: “In our latest narrative from 09 Jun, when USD was at 7.1870, we indicated at that time that USD ‘has likely moved back into a range trading phase, probably between 7.1620 and 7.2200.’ After trading mostly sideways for a couple of weeks, USD dipped and tested the 7.1620 level yesterday. Downward momentum is building, albeit tentatively for now. From here, provided that the ‘strong resistance’ level, currently at 7.1950, is not breached, USD is likely to edge lower toward 7.1450.”
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