The continuation of the downside in USD/CNH remains on the cards with a tough support at the 6.9300 region, comment UOB Group’s Market Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘has likely moved into a consolidation phase’ and we expected it to ‘trade within a range of 6.9400/7.0000’. USD subsequently traded between 6.9530 and 7.0000. Further consolidation would not be surprising, expected to be between 6.9600 and 7.0000.”

Next 1-3 weeks: “We continue to hold the same view as yesterday (06 Dec, spot at 6.9650). As highlighted, while further USD weakness is not ruled out, oversold short-term conditions could lead to a couple of days of consolidation first. That said, 6.9300 is a strong support and might not be easy to break. Looking ahead, the next support is at 6.9000. On the upside, a breach of 7.0400 (no change in ‘strong resistance’ level) would indicate that the USD weakness from late last week has come to an end.”