Further decline could drag USD/CNH to the 7.1240 level in the short term, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
24-hour view: We expected USD to edge lower yesterday. However, we were of the view that “any decline is unlikely to break 7.1500.” We did not anticipate the sharp selloff that sent USD plunging to a low of 7.1259. While severely oversold, the weakness in USD has not stabilised. Today, USD could test 7.1250 before stabilising. We do not expect 7.1000 to come under threat. On the upside, if USD breaks above 7.1800 (minor resistance is at 7.1650), it would mean that the weakness in USD has stabilised.
Next 1-3 weeks: Our latest narrative was from a week ago (19 Jul, spot at 7.1950) wherein USD is likely to trade in a range between 7.1500 and 7.2500. After trading within the range for a week, USD cracked 7.1500 yesterday and plunged to 7.1259. Downward momentum has increased, and there is room for USD to weaken further. However, it is worth noting that there are couple of strong support levels at 7.1240 and 7.1000. The downside risk is intact as long as USD stays below 7.2000.
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