USD/CNH: extra losses are likely below 6.90 – UOB
In view of FX Strategists at UOB Group, USD/CNH is seen accelerating the downside on a breach of 6.90.
24-hour view: “While we were of the view of a lower USD after last month’s 6.9247 low, the pace of declines surprised us with a move to 6.9105 on Fri (vs our expectations of 6.9140). The further retreat to 6.9000 this morning means that risk is clearly on the downside in the near term. Below 6.9000, a quick move to 6.8900 would not come as a surprise. On the topside, resistances are at 6.9070 and 6.9230.”
Next 1-3 weeks: “As mentioned in the previous update, USD had to close below the December’s low near 6.9250 in order to indicate that it is ready for sustained decline in the coming weeks (next support is at 6.8800). USD did just that and more on Friday, plummeting to a low of 6.9105 after taking out 6.9250. Although the down-move that started since the turn of year looks increasingly stretched, strong momentum still pins the USD lower. From here, upon a NY close below 6.9000, the next support at 6.8800 may come into focus quickly. On the topside, expect resistances 6.9370 and 6.9500. Overall, USD is expected to stay on the back foot unless it can reclaim 6.9800.”