USD/CNH still faces downside pressure – UOB

USD/CNH could still head towards the 6.4015 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to ‘trade between 6.4180 and 6.4380’ yesterday. USD subsequently dropped to 6.4226 before rebounding sharply to 6.4403 during NY hours. The sharp rebound appears to be running ahead of itself and a sustained advance in USD appears unlikely for today. From here, USD could edge higher but a clear break of the major resistance at 6.4460 is unlikely. Support is at 6.4330 followed by 6.4250.”

Next 1-3 weeks: “Our view from yesterday (19 May, spot at 6.4255) still stands. As highlighted, USD is under mild downward pressure and could grind lower to 6.4015. At this stage, the prospect for a sustained decline below this level is not high. On the upside, a breach of 6.4460 (‘strong resistance’ level) would indicate that the current mild downward pressure has eased.”