USD/CNH: Sellers remain focused on 6.3050 – UOB

USD/CNH risks a deeper decline on a break below 6.3050, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sharp plunge in USD to 6.3080 came as a surprise (we were expecting sideway-trading). While the rapid drop appears to be overdone, USD could test the support at 6.3050 before the current weakness should stabilize. For today, the next support at 6.2970 is unlikely to come into the picture. On the upside, a break of 6.3260 (minor resistance is at 6.3220) would indicate the current weakness has stabilized.”

Next 1-3 weeks: “Yesterday (23 Feb, spot at 6.3230), we highlighted that while downward momentum has more or less dissipated, USD could edge lower but only a clear break of 6.3050 would indicate that it is ready to head lower in a sustained manner. However, we did not expect the subsequent sharp drop to 6.3080. Downward momentum is beginning to build again but USD has to close below 6.3050 before a sustained decline is likely. Looking ahead, the next support is at 6.2970. The chance for USD to close below 6.3050 would remain intact as long as 6.3330 is not breached within these few days.”