USD/CNH risks a deeper drop below 7.2390 – UOB

Further downside in USD/CNH appears likely on a breach of 7.2390, argue Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: USD fell briefly to 7.2392 last Friday before rebounding strongly to end the day largely unchanged at 7.2715 (-0.05%). The price movements did not result in any significant increase in momentum. Today, USD is likely to trade sideways, probably in a range of 7.2460/7.2860. 

Next 1-3 weeks: Our latest narrative was from 24 Aug (spot at 7.2840), wherein USD is likely to trade in a range of 7.2500/7.3300 for the time being. Last Friday (01 Sep), USD fell below 7.2500 (low of 7.2392) before rebounding to close at 7.2715 (-0.05%). Despite no significant increase in downward momentum, the breach of 7.2500 has slightly increased the downside risk. However, USD must break and stay below 7.2390 before a sustained decline is likely. The chance of USD breaking clearly below 7.2390 will remain intact as long as USD stays below 7.3000 in the next few days.