USD/CNH: Unlikely to threaten the major support at 7.1435 – UOB Group

US Dollar (USD) could edge lower but is unlikely to threaten the major support at 7.1435. In the longer run, rapidly increasing downward momentum indicates USD could drop below 7.1435; it is unclear now if 7.1290 is within reach, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Downward momentum indicates USD can at least 7.1435

24-HOUR VIEW: "Our view that USD 'could drop below July’s low of 7.1435' yesterday was incorrect. USD dropped briefly to 7.1473, rebounded strongly to 7.1650, and then eased to close largely unchanged at 7.1535 (-0.06%). Despite the choppy price action, the underlying tone appears soft. Today, we expect USD to edge lower, but given the mild downward pressure, any decline is unlikely to threaten 7.1435. On the upside, resistance levels are at 7.1600 and 7.1650."

1-3 WEEKS VIEW: "Our update from yesterday (26 Aug, spot at 7.1580) remains valid. As pointed out, 'the rapidly increasing downward momentum indicates USD could drop below July’s low of 7.1435.' However, currently, it is unclear if the next support at 7.1290 is within reach. We will maintain our negative view as long as 7.1800 (no change in ‘strong resistance’ level) is not breached."