US Dollar (USD) is expected to trade between 7.2300 and 7.2580 vs Chinese Yuan (CNH). In the longer run, to continue to decline, USD must break and remain below 7.2300, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD must break and remain below 7.230 to continue to decline
24-HOUR VIEW: “We did not anticipate USD to plunge to a low of 7.2314 yesterday (we were expecting range trading). The steep selloff seems excessive, and USD is unlikely to decline much further. Today, we expect USD to trade between 7.2300 and 7.2580.”
1-3 WEEKS VIEW: “On Monday (17 Feb, spot at 7.2600), we highlighted that ‘the increase in downward momentum suggests USD could decline the major support level at 7.2300.’ After USD rebounded, we indicated yesterday (20 Feb, spot at 7.2850) that “a breach of 7.2960 (‘strong resistance’ level), we indicate that USD is not declining further.” USD subsequently sold off sharply, almost reaching 7.2300 (low has been 7.2314). While we continue to expect USD to decline, it must break and remain below 7.2300 before further weakness is likely. The likelihood of USD breaking clearly below 7.2300 will remain intact as long as 7.2800 (‘strong resistance’ level previously at 7.2960) is not breached. Looking ahead, the next level to watch below 7.2300 is 7.2100.”
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