USD/CNH: To encounter solid support at 7.1000 – UOB Group

USD could drift lower, but any decline is likely part of a lower trading range of 7.1150/7.1400. In the longer run, USD is under mild downward pressure; it could edge lower, but any decline is expected to encounter solid support at 7.1000, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD is under mild downward pressure

24-HOUR VIEW: “USD traded between 7.1200 and 7.1350 yesterday, closing largely unchanged at 7.1210 (-0.05%). Despite the quiet price movements, the underlying tone appears to be soft. Today, USD could drift lower, but any decline is likely part of a lower trading range of 7.1150/7.1400. In other words, USD is unlikely to break clearly below 7.1150 or above 7.1400.”

1-3 WEEKS VIEW: “In our most recent narrative from Monday (28 Oct, spot at 7.1460), we highlighted that ‘While upward momentum is building, USD must break and remain above 7.1600 before further sustained gains are likely.’ We added, ‘The likelihood of USD breaking clearly above 7.1600 will remain intact, provided that 7.1200 is not breached in the next few days.’ USD subsequently rose to 7.1650 before pulling back quickly. Yesterday, it dropped to a low of 7.1200. The buildup in upward momentum has faded, and downward momentum has increased slightly. From here, USD could edge lower, but any decline is expected to encounter solid support at 7.1000. On the upside, a breach of 7.1480 would mean that the current mild downward pressure has eased.”