UOB Group’s FX Strategists now believe USD/CNH could shed further ground and retest 6.3525 in the next weeks.

Key Quotes

24-hour view: “While we expected USD to weaken yesterday, we were of the view that ‘6.3750 is likely out of reach’. However, USD dropped to a low of 6.3644. Downward momentum has improved and a break of Nov’s low near 6.3615 would not be surprising. The next support is at 6.3525. On the upside, 6.3800 is expected to be strong enough to cap any rebound (minor resistance is at 6.3740).”

Next 1-3 weeks: “Yesterday (30 Nov, spot at 6.3845), we held the view that USD is likely to trade between 6.3700 and 6.4000. However, USD cracked 6.3700 and dropped to 6.3644. The rapid improvement in downward momentum suggests that USD could weaken to 6.3525. The downside risk is deemed intact as long as USD does not move above the ‘strong resistance’ level (currently at 6.3880).”