USD/CNH: Remains under pressure and risks a drop to 7.0535 – UOB

FX Strategists at UOB Group suggested USD/CNH could slip back to the 7.035 level in the next weeks.

Key Quotes

24-hour view: “After closing little changed for several days, USD plunged and dropped sharply to 7.0909 before extending its decline this morning. Strong downward momentum suggests further weakness towards 7.0680. Resistance is at 7.0950 followed by 7.1020.”

Next 1-3 weeks: “After USD surged strongly last Friday, we indicated on Monday (04 May, spot at 7.1370) that the ‘rebound in USD has room to test the March’s peak near 7.1650’. We added, ‘the odds for USD to move above this level in a sustained manner are not high’. USD subsequently traded in a quiet manner for a few days before lurching lower yesterday. The risk has shifted quickly to the downside and from here; USD could test the end-April low of 7.0535. On the upside, only a move above 7.1180 would indicate the current downward pressure has eased.”