USD/CNH now faces some consolidation – UOB
Following the recent price action, USD/CNH is now seen moving into a side-line pattern, suggested FX Strategists at UOB Group.
24-hour view: “Our expectation for USD to ‘trade sideways’ was incorrect as it slumped and cracked a couple of strong support levels. While the rapid drop appears to be running ahead of itself, there is not sign of stabilization just yet. From here, barring a move above 7.0000 (minor resistance is at 6.9900), USD could move below the 6.9640 overnight low towards 6.9560.”
Next 1-3 weeks: “We highlighted the ‘slowing momentum and overbought conditions’ two days ago (04 Feb, spot at 7.0060) and added, ‘7.0400 could be just out of reach’. The breach of the ‘strong support’ at 6.9680 yesterday indicates that the advance from 22 Jan (see annotations in the chart below) has run its course. The current movement is viewed as the early stages of a consolidation phase and USD is expected to trade sideways between 6. 9300 and 7.0100 for a period.”