USD/CNH: A drop to 6.6750 should not be ruled out – UOB

Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group acknowledge the likeliness of USD/CNH slipping back to the 6.6750 region in the short term.

Key Quotes

24-hour view: “After trading quietly for a few days, USD plunged to a low of 6.7152. USD extended its decline today and is likely to drop further. While USD might drop below the Jan’s low near 6.6980, the next support at 6.6750 is unlikely to come under threat. Resistance is at 6.7300, followed by 6.7450.”

Next 1-3 weeks: “Two days ago (31 Jan, spot at 6.7580), we indicated ‘downward momentum has faded and USD is likely to trade sideways within a range of 6.7270/6.7950 for now’. We did not expect the sharp sell-off in NY trade. The sharp drop has resulted in a rapid increase in downward momentum and USD is likely to drop below last month’s low near 6.6980. Further weakness to 6.6750 is not ruled out. Overall, only a breach of 6.7550 (‘strong resistance’ level) would indicate that USD is not ready to head lower.”