USD/CNH could drop further and test 6.84 – UOB

In opinion of FX Strategists at UOB Group, USD/CNH is seen losing further ground and testing the 6.84 region in the next weeks.

Key Quotes

24-hour view: “Our current rhetoric of ‘with oversold conditions, it is likely that the spot rate would transit next into a sideways pattern going forth’ seems to be panning out well, USD stabilizing at around 6.9000 on Wed. That said, upward momentum is underwhelming and a sustained recovery above 6.9000 remains unlikely. Resistance is at 6.9030 and 6.9120. On the downside, the next key support is at 6.8720 but it should be out of reach today.”

Next 1-3 weeks: “In our previous update on 13-Jan, we cited that ‘upon a NY close below 6.9000, the next support at 6.8800 may come into focus quickly.’ USD touched a low of 6.8802 on Mon and slipped further on Tue morning. While the down-move is becoming increasingly stretched, it appears that USD may still have scope to decline towards 6.8400 in the coming sessions. On the topside, expect resistances 6.9250 and 6.9370. Overall, USD is expected to stay on the back foot unless it can reclaim 6.9500.”