USD/CNH: Pullback could see 7.2600 retested – UOB

The continuation of the downward bias could drag USD/CNH to revisit the 7.2600 region in the next few weeks, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: We highlighted yesterday that USD “could drop further to 7.2870 before stabilisation can be expected.” Our expectation did not materialise as it traded sideways between 7.2929 and 7.3145 before closing largely unchanged at 7.2995 (-0.03%). Today, USD could continue to trade sideways, albeit likely in a wider range of 7.2870/7.3200. 

Next 1-3 weeks: After USD dropped sharply to a low of 7.2921 on Monday, we highlighted yesterday (12 Sep, spot at 7.3035) that “while it is premature to expect a major reversal, the sharp pullback could extend to 7.2600.” There is no change in our view. Overall, only a breach of 7.3520 would indicate that USD is not ready to pullback further.