USD/CNH: Diminishing bets for further pullbacks – UOB

Extra losses in USD/CNH now appears to have lost some traction in past sessions, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “After trading in a relatively quiet manner for a few days, the strong advance in USD that sent it a high of 6.8564 came as a surprise. While quickly reaching overbought, the advance in USD has scope to extend higher. That said, the resistance at 6.8660 is likely out of reach (6.8600 is already quite a strong level). Support is at 6.8430 but the stronger level is at 6.8350.”

Next 1-3 weeks: “Our latest narrative was from Monday (07 Sep, spot at 6.8360) wherein ‘downward momentum has eased somewhat but there is still chance for USD to push lower towards 6.8000’. Momentum has eased further as USD staged a relatively strong advance of +0.32% yesterday (NY close of 6.8536). From here, unless USD moves and stays below 6.8350 within these 1 to 2 days, a breach of the ‘strong resistance’ at 6.8800 (no change in level) would not be surprising and would indicate that the negative phase in USD that started in midAugust has run its course. To put it another way, the odds for further USD weakness have diminished considerably.”