In light of the recent price action, USD/CNH could still slip back to the 6.3525 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘bias is on the downside but any USD weakness is likely limited to a test of 6.3700’. Our expectations did not quite materialize as USD dropped to 6.3750 before recovering. Downward pressure has eased and USD is likely to trade sideways for today, expected to be between 6.3730 and 6.3910.”

Next 1-3 weeks: “After the outsized sell-off in USD, we highlighted last Wednesday (20 Oct, spot at 6.3780) that while the sell-off appears to be overdone, there is scope for USD to drop to May’s low near 6.3525. There is no change in our view for now. The downside risk is intact as long as USD does not move above the ‘strong resistance’ level at 6.4200 (no change in level).”