Outlook is mixed; US Dollar (USD) is likely to trade in a 7.1900/7.2300 range against Chinese Yuan (CNH). In the longer run, USD could range-trade for a few days before resuming its decline; the level to watch is at 7.1700, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD can range-trade for a few days
24-HOUR VIEW: “USD fell to a low of 7.1846 on Monday and then rebounded. Yesterday, we pointed out that ‘the rebound amid apparent positive divergence suggests there is room for USD to rise further to 7.2400.’ USD subsequently rose but only reached 7.2351, retreating sharply from the high. The price action has resulted in a mixed outlook. Today, we expect USD to trade in a 7.1900/7.2300 range.”
1-3 WEEKS VIEW: “We continue to hold the same view as yesterday (06 May, spot at 7.2150). As highlighted, ‘although a further decline remains possible, the deeply oversold short-term conditions suggest that the USD may range-trade for a few days before resuming its decline.’ The level to watch is at 7.1700. Overall, only a breach of 7.2600 (‘strong resistance’ level was at 7.2800 yesterday) would mean that USD is not declining further.”
