Decline is likely part of a lower range of 7.2400/7.2800 – UOB Group

Further US Dollar (USD) weakness vs Chinese Yuan (CNH) is not ruled out, but any decline is likely part of a lower range of 7.2400/7.2800. In the longer run, USD could remain under pressure but note the pair of strong supports at 7.2400 and 7.2260, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD can remain under pressure

24-HOUR VIEW: “The sharp and swift selloff that sent USD plummeting by 0.69% (7.2535) was surprising. Note that the 0.69% drop is the second biggest one-day drop this year. The decline appears excessive, but with no signs of stabilisation just yet, further weakness is not ruled out. However, given the deeply oversold conditions, any decline is likely part of a lower range of 7.2400/7.2800.”

1-3 WEEKS VIEW: Our latest narrative was from last Friday (28 Feb, spot at 7.2950), wherein the strong advance from last Thursday ‘indicates there is potential for USD to rise to 7.3250.’ In a sudden move yesterday, USD plunged to a low of 7.2485. The breach of our ‘strong support’ level at 7.2680 has invalidated our view. Although the sharp drop yesterday indicates USD could remain under pressure, note that there is a pair of strong supports at 7.2400 and 7.2260. To maintain the downward pressure, USD must not break above 7.2980.”