USD/CNH faces further downside pressure – UOB

According to FX Strategists at UOB Group, USD/CNH could slip back to the 7.0535 level in the next weeks.

Key Quotes

24-hour view: “Our expectation from last Friday for USD to ‘weaken further to 7.0680’ was incorrect as it rebounded from a low of 7.0814. Downward pressure has dissipated quickly, and USD has likely moved into a consolidation phase and is expected to trade between 7.0800 and 7.1050.”

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.”