USD/CNH: Rising odds for extra weakness – UOB

Further upside in USD/CNH looks on the cards in the short-term horizon, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘a break of the 7.0759 low could lead to a drop in USD towards 7.0650’. While USD took out 7.0759, the subsequent weakness fell short of our expectation (overnight low of 7.0710). The underlying tone remains weak and from here, barring a move above 7.0850, USD could break 7.0650 and weaken further to 7.0550.”

Next 1-3 weeks: “USD traded in a relatively quiet manner over the past few days and there is not much to add to our update from Monday (27 Apr, spot at 7.0850). As highlighted, the underlying tone in USD is weak and the downside risk is increasing. That said, only a break of 7.0650 would improve the chance of USD moving towards 7.0370. The prospect for such a scenario appears to be quite high unless USD moves above 7.0980 (‘strong resistance’ level previously at 7.1030).”