UOB’s Quek Ser Leang and Lee Sue Ann note that USD/CNH has slipped toward the lower end of its recent range after trading tightly between 6.7923 and 6.8033. They see rapidly increasing downward momentum that could test major support at 6.7820, though it is unclear if a clear break will occur, and still frames price action as a 6.7820–6.8220 range unless 6.7820 gives way decisively.

Offshore Yuan keeps Dollar in defined band

"24-HOUR VIEW: USD traded within a narrow range of 6.7964/6.8080 last Thursday. On Friday, we indicated that “the price action provides no fresh clues,” and we stated that USD “could trade between 6.7920 and 6.8060.” USD then traded between 6.7923 and 6.8033, closing largely unchanged at 6.7971 (-0.05%). USD opened lower today and the rapidly increasing downward momentum suggests USD could test the major support at 6.7820. Currently, it is unclear whether USD has enough momentum to break clearly below this level. To keep the momentum going, USD must not break above 6.7995 (minor resistance is at 6.7955)."

"1-3 WEEKS VIEW: Last Thursday (21 May, spot at 6.8010), we highlighted that “the current price movements are likely part of a range-trading phase between 6.7820 and 6.8220.” Although short-term downward momentum is increasing after the sharp drop this morning, it is unclear for now whether USD can break clearly below this level. In other words, we continue to expect range-trading for now. Looking ahead, if USD breaks and holds below 6.7820, it could trigger a continued decline in USD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)