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A deeper pullback emerges on the horizon in case USD/CNH breaches 7.1100 in the near term, suggest UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.
Key Quotes
24-hour view: We indicated yesterday that “as long as USD stays below 7.1500, it is likely to edge lower.” Our view was incorrect as USD rose to high of 7.1550. The advance lacks momentum, and USD is unlikely to rise much further. Today, USD is more likely to trade in a range, probably between 7.1300 and 7.1580.
Next 1-3 weeks: Our update from yesterday (04 Dec, spot at 7.1250) is still valid. As highlighted, the recent price action has resulted in a slight increase in downward momentum. If USD breaks the major support at 7.1100, the next level to watch is 7.0600. Conversely, if USD breaks above 7.1660 (no change in ‘strong resistance’ level), it would mean that the USD weakness from the middle of last month has stabilised.
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