USD/CNH: Further weakness appears not favoured – UOB

According to FX Strategists at UOB Group, extra losses in USD/CNH seem unlikely in the short-term horizon.

Key Quotes

24-hour view: “Our expectations for USD to consolidate were incorrect as USD staged a sharp but short-lived drop to 6.3428 before rebounding. While there is room for the rebound to extend, any advance is unlikely to break the strong resistance at 6.3710 (minor resistance is at 6.3660). Support is at 6.3640 followed by 6.3500.”

Next 1-3 weeks: “Last Thursday (13 Jan, spot at 6.3625), we highlighted that downward momentum is beginning to build and USD is expected to trade with a downward bias towards 6.3500. USD dropped to 6.3428 on Friday before rebounding strongly. Downward momentum has waned quickly and the odds for further USD weakness are not high. However, only a breach of 6.3710 (‘strong resistance’ level was at 6.3760 last Friday) would indicate that the downside risk has dissipated.”