Chinese Yuan: Consolidation holds upside bias against US Dollar – UOB

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note that USD/CNH is currently consolidating in a narrow range around 6.77. In their 1–3 week view, they maintain a downside bias toward 6.7600 as long as strong resistance at 6.7820 remains intact. Over 1–3 months, they see tentative upside potential if key technical resistance is broken.

Short-term consolidation, medium-term downside bias

"24-HOUR VIEW: After USD fell as we expected on Wednesday, we highlighted the following yesterday: “Our view was not wrong, as USD subsequently rose to 6.7781 and then fell to a low of 6.7653. Downward momentum continues to increase, and today, there is a chance for USD to test 6.7600. To keep the momentum going, USD must hold below 6.7780 (minor resistance is at 6.7720).” Our expectation did not materialise, as USD traded in a quiet manner between 6.7649 and 6.7753, closing little changed at 6.7734 (+0.07%). The current price movements are likely part of a consolidation phase, which is expected to be between 6.7670 and 6.7780."

"1-3 WEEKS VIEW: Two days ago (15 Jul, spot at 6.7720), we highlighted that “downward momentum is increasing, and USD is likely to trade with a downside bias toward 6.7600.” We will continue to hold the same view as long as 6.7820 (no change in ‘strong resistance’ level) is not breached."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)