United Overseas Bank (UOB) strategists Quek Ser Liang and Lee Su En say USD/CNH is currently consolidating in a narrow range around 6.77. In their 1-3 week outlook, they maintain a downside bias towards 6.7600 as long as strong resistance at 6.7820 holds. In 1-3 months, they see the possibility of a temporary bounce if key technical resistance is broken.
Short-term consolidation, downside bias in the medium term
“24-hour view: After the USD declined as we expected on Wednesday, we highlighted the following yesterday: “Our view was not wrong, as the USD subsequently rose to 6.7781 and then fell to a low of 6.7653. The downside momentum continues to increase, and today, the USD has a chance to test 6.7600. For the momentum to continue, USD needs to stay below 6.7780 (minor resistance lies at 6.7720). Our expectations were not met, as the USD traded quietly between 6.7649 and 6.7753, and closed little changed at 6.7734 (+0.07%). The current price movement is probably part of a consolidation phase, which is expected between 6.7670 and 6.7780.”
“1-3 week view: Two days ago (July 15, spot at 6.7720), we highlighted that “downward momentum is increasing, and the USD is likely to trade with a downside bias towards 6.7600.” This is our view until 6.7820 is breached (no change to the ‘strong resistance’ level).”
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