Chinese Yuan: Building upside momentum toward 6.6800 against US Dollar – UOB
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note USD/CNH unexpectedly fell to 6.6919 on Friday, with downside momentum starting to build. Intraday, they see potential for a brief dip below 6.6900, provided the pair stays under 6.6985. Over 1–3 weeks, a clear break and close beneath 6.6900 could open the way toward 6.6800, while resistance is now at 6.7050.
Risk of break below 6.6900 support
"24-HOUR VIEW: We expected USD to “trade in a range between 6.7000 and 6.7080” last Friday. We did not expect USD to decline to a low of 6.6919. Downward momentum has increased, but not significantly. Today, USD could dip below 6.6900, but it remains to be seen whether downward momentum will strengthen sufficiently for it to maintain a foothold below this level. To keep the momentum going, USD must hold below 6.6985"
"1-3 WEEKS VIEW: We have been expecting USD to trade in a range since late last month. Last Friday (09 Oct, spot at 6.7030), we indicated that “we continue to expect USD to range-trade, but the low volatility since then suggests that a narrower 6.6900/6.7180 range should be sufficient to contain price movements for now.” USD then fell to a low of 6.6919. Downward momentum is building, and if USD breaks and closes below 6.6900, it may lead to a move toward 6.6800. The likelihood of USD breaking clearly below 6.6900 will remain intact as long as USD holds below the ‘strong resistance’ level, now at 6.7050."
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