There is potential for US Dollar (USD) to drop below 7.1500 against Chinese Yuan (CNH); it is unclear whether there is sufficient momentum for it to reach 7.1450. In the longer run, downward momentum has increased further; if USD breaks below 7.1450, the next level to monitor is 7.1300, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum has increased further
24-HOUR VIEW: "We expected USD to 'trade in a range of 7.1590/7.1780' yesterday. USD subsequently traded between 7.1582 and 7.1706. USD closed at 7.1584 before declining in the early Asian trade today. Given the increasing momentum, there is potential for USD to drop below 7.1500 today. However, it is unclear for now whether there is sufficient momentum for USD to reach 7.1450. On the upside, resistance levels are at 7.1630 and 7.1670."
1-3 WEEKS VIEW: "Last Wednesday (25 Jun, spot at 7.1680), we highlighted that 'there has been a tentative buildup in momentum, and USD is likely to edge lower to 7.1450.' Yesterday, USD dropped to a low of 7.1582. Downward momentum has increased further, and if USD breaks below 7.1450, the next level to monitor is 7.1300. We will maintain our view as long as the ‘strong resistance’ at 7.1790 (level previously at 7.1950) is not breached."
