USD/CNH: Door open to extra consolidation – UOB

FX Strategists at UOB Group believe USD/CNH should navigate within the 7.0400/7.1000 range in the next weeks.

Key Quotes

24-hour view: “The sudden decrease in activity in USD that resulted in a narrow trading range of 127 pips (between 7.0761 and 7.0888) came as a surprise. The price action offers no fresh clues and USD could continue to trade sideways for now, expected to be between 7.0700 and 7.0900.”

Next 1-3 weeks: “We highlighted the increased downside risk yesterday and indicated ‘if USD closes below 7.0500, it could weaken to 7.0350’. USD subsequently dropped to 7.0458 before rebounding strongly to take out the ‘strong resistance’ level at 7.0800 (high of 7.0831). Downward pressure has eased and USD does not appear to be ready to move lower just yet. From here, USD is expected to trade sideways, likely within a broad 7.0400/7.1000 range.”