USD/CNH faces some consolidation ahead of potential losses – UOB

FXStreet notes that following the recent price action, USD/CNH is likely to embark on a consolidative trip in the near-term, suggested FX Strategists at UOB Group.

24-hour view: “We expected USD to ‘consolidate further within a 6.8200/6.8430 range’ yesterday but it rebounded to a high of 6.8493 (low has been 6.8250). The recovery lacks momentum and while there is room for USD to test the 6.8530 resistance from here, a sustained advance above this level is unlikely. Support is at 6.8320 followed by 6.8250.”

Next 1-3 weeks: “We expected ‘the current weakness to extend to 6.8300, possibly 6.8160’. USD subsequently plummeted and quickly exceeded the 6.8160 level as it dropped to a low of 6.8143. From here, we continue to see risk for further USD weakness even though oversold conditions could lead to a few days of consolidation first. Only a break of 6.8800 (‘strong resistance’ level was at 6.8950 yesterday) would indicate that the current weak phase in USD that started about 2 weeks ago has run its course. Until then, the roundnumber support level of 6.8000 is likely beckoning to USD.”