Extra losses in USD/CNH are expected on a break below 6.5319, in opinion of FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday ‘strong downward momentum suggests further USD weakness is likely even though the year-to-date low of 6.5319 could be just out of reach’. Our view was not wrong as USD dropped to a low of 6.5425. Downward momentum has improved, albeit not by much. From here, USD could test 6.5319 first before a rebound can be expected. For today, the next support at 6.5200 is not expected to come into the picture. Resistance is at 6.5550 followed by 5.5660.”
Next 1-3 weeks: “We have held the same view for a week wherein USD ‘is in a consolidation and could trade between 6.5400 and 6.6200 for a period of time’. USD weakened sharply yesterday (01 Dec) and is approaching the bottom of the range at 6.5400. Downward momentum is beginning to improve but is not strong for now. USD has to stage a NY closing below the year-to-date low of 6.5319 in order to indicate that the next down-leg towards 6.4960 has started. The prospect for such a move is not high for now but it would increase as long a USD does move above 6.5800 within these few days.”
Credit: FX Street