USD/CNH: DOWNSIDE PRESSURE ALLEVIATED ABOVE 6.7850 – UOB17 January 2023, 12:08

The surpass of 6.7850 would be indicative that the likelihood of further weakness in USD/CNH appears mitigated, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘could dip below 6.7000 but a sustained decline below this level is still unlikely’. Our view was not wrong as USD dropped to 6.6982 before rebounding strongly to end the day at 6.7466 ( 0.56%). Downward pressure has eased and the current price movements are likely part of a consolidation. In other words, USD is likely to trade in a range today, expected to be between 6.7250 and 6.7550.”

Next 1-3 weeks: “We have held a negative USD view for more than a week now. After USD fell sharply and rapidly, in our update from last Friday (13 Jan, spot at 6.7300), we highlighted that while USD is likely to weaken further, after such a large decline over a short period, the prospect of a sustained drop below 6.7000 is not high. Yesterday (16 Jan), USD dropped to 6.6982 before rebounding. Downward momentum is beginning to ease and a break of 6.7580 (no change in ‘strong resistance’ level) would indicate that the weakness in USD has stabilized.”