Chinese Yuan: Gradual decline within tight bands – UOB

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann expect USD/CNH to edge lower intraday but stay confined to a narrow 6.6890–6.6960 range, with a clear break below 6.6890 seen as unlikely. Over one to three weeks, they see downside extending toward 6.6820 as momentum builds. On a one- to three-month view, they anticipate further gradual declines while the pair trades below the cloud near 6.7815.

Downward momentum points to lower levels

"24-HOUR VIEW: USD extended its decline from last Friday, dipping to a low of 6.6912. Downward momentum has increased, albeit just slightly. Today, we expect USD to edge lower, but it is likely to stay within a 6.6890/6.6960 range. In other words, it is unlikely to break clearly below 6.6890."

"1-3 WEEKS VIEW: In our latest update from last Friday (18 Sep, spot at 6.7035), we highlighted the following: “Downward momentum is building, and if USD breaks and holds below 6.7000, it could decline toward 6.6920. The likelihood of USD breaking clearly below 6.7000 will remain intact as long as USD holds below 6.7170 (‘strong resistance’ level).” USD subsequently broke below 6.7000 and yesterday, it declined further to 6.6912. Downward momentum continues to build, and USD could decline to 6.6820 next. On the upside, the ‘strong resistance’ level is now at 6.7020."

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