USD/CNH seen grinding lower towards 6.6710 – UOB

USD/CNH is forecasted to test the 6.6710 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24- hour view: “The sudden and sharp sell-off in USD that sent it plummeting to a low of 6.6872 came as a surprise. While oversold, the decline has scope to extend lower but for today, any weakness is likely limited to a test of the month-to-date low of 6.6788 (minor support is at 6.6850). On the upside, a break of 6.7120 (minor resistance is at 6.7050) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “After trading in a quiet manner for a couple of days, USD lurched lower on Friday (16 Oct) and came close to the bottom of our expected consolidation range of 6.6850/6.7850 (low of 6.6872). While downward momentum is beginning to improve, the recent weakness in USD has yet to fully unwind from oversold conditions. That said, short-term downward has improved and USD is likely to trade with a downward bias towards the major support to 6.6710. Overall, USD is deemed to be under pressure unless it can move above 6.7300 (‘strong resistance’ level).”