USD/CNH faces consolidation between 7.0500/7.1250 – UOB

In light of the recent price action, USD/CNH is expected to trade within a consolidative mood between 7.0500 and 7.1250 in the next weeks.

Key Quotes

24-hour view: “USD traded in a relatively narrow range of 7.0669/7.0875 last Friday before ending the day little changed at 7.0755 (-0.06%). The firm price action upon opening this morning suggests that a break of the strong resistance at 7.0950 would not be surprising. However, USD is unlikely to move above 7.1100. Support is at 7.0820 followed by 7.0740.”

Next 1-3 weeks: “Last Monday (08 Jun, spot at 7.0570), we indicated that USD ‘could weaken to 7.0400’. After USD dropped to 7.0400, we highlighted on Thursday (11 Jun) that ‘the negative phase in USD is still intact and noted that the next support below 7.0400 is at 7.0200 followed 7.0000’. We added, ‘oversold short-term conditions could lead to a few days of consolidation first’. The subsequent consolidation has resulted in a rapid loss in momentum and while our 7.0950 ‘strong resistance’ is still intact, the prospect for USD to move below 7.0400 from here has dissipated. In other words, USD has likely moved into a consolidation phase and is expected to trade between 7.0500 and 7.1250 for a period.”