USD/CNH eyes the next support around 6.4200 – UOB

UOB Group’s FX Strategists see USD/CNH facing quite a moderate support around the 6.4200 level in the next weeks.

Key Quotes

24-hour view: “While we expected USD to weaken last Friday, we were of the view that ‘the major support at 6.4300 is not expected to come into the picture’. However, USD cracked 6.4300 and dropped to 6.4244 before rebounding strongly. The strong bounce coupled with oversold conditions suggest that USD is unlikely to move below the 6.4244 low. For today, USD is likely to trade between 6.4330 and 6.4550.”

Next 1-3 weeks: “Last Friday (03 Sep, spot at 6.4490), we highlighted that USD ‘is under mild downward pressure and could drift lower to 6.4300’. We did not anticipate the sharp but short-lived drop to 6.4244 and the subsequent strong rebound. The price actions suggest that while USD is still under pressure, the next major support at 6.4200 may not come into the picture so soon. On the upside, a break of 6.4660 (‘strong resistance’ level was at 6.4710 last Friday) would indicate that the current downward pressure has eased.”