USD/CNH still faces strong contention around 6.8500 – UOB

Bearish attempts in USD/CNH are unlikely to breach the key 6.8500 region for the time being, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘momentum indicators are mostly flat’ and expected USD ‘trade sideways in a range of 6.9100/6.9350’. Our view for USD to trade sideways was not wrong even though it traded in a narrower range than expected (6.9162/6.9250). The quiet price actions offer no fresh clues and we continue to expect USD to trade sideways, likely between 6.9150 and 6.9350.”

Next 1-3 weeks: “There is no change in our view from last Friday (05 May, spot at 6.9150). As highlighted, USD could continue to weaken but short-term conditions are deeply oversold and the chance of it breaking the formidable support at 6.8500 is low for now. Overall, USD is likely to trade under pressure for now unless it can break above the ‘strong resistance’ at 6.9400 (no change in level from last Friday).”