USD/CNH: Downside alleviated above 7.3150 – UOB

Further decline should lose traction once USD/CNH clears the 7.3150 level, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: We expected USD to trade in a range between 7.2800 and 7.3050 yesterday. However, it traded in a higher range of 7.2889/7.3076. The price action offers no fresh clues, and we continue to expect USD to trade in a range, probably between 7.2850 and 7.3150.

Next 1-3 weeks: Slightly more than a week ago (12 Sep, spot at 7.3035), we highlighted that “while it is premature to expect a major reversal, the pullback in USD could extend to 7.2600.” After USD pulled back to 7.2596 and rebounded, in our most recent narrative from two days ago (18 Sep, spot at 7.2760), we highlighted that “while USD is likely to weaken further, the major support at 7.2390 might now come into view so soon.” Since then, USD has not been able to make further headway on the downside. Downward momentum has slowed, and if USD breaks above 7.3150 (no change in ‘strong resistance’ level from previously), it would indicate that 7.2390 is not coming into view this time around.