Further weakness could drag USD/CNH to the 7.2700 region in the short-term horizon, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
24-hour view: We did not expect USD to drop to a low of 7.2848 yesterday (we were expecting it to trade sideways). The decline has gathered considerable momentum. Today, USD is likely to head lower and possibly break 7.2700 (there is another support at 7.2800). In order to keep the momentum going, USD must stay below 7.3060 (minor resistance is at 7.2980).
Next 1-3 weeks: Yesterday (09 Sep, spot at 7.3120), we highlighted that USD is likely to trade in a range between 7.2950 and 7.3400. We did not expect it to drop to a low of 7.2848. Downward momentum is improving, and there is a chance for USD to break below the next support at 7.2700. If USD breaks clearly below this level, it could potentially trigger a rapid drop to 7.2400. On the upside, if USD breaks above 7.3200, it would mean that the momentum buildup has fizzled out.