Further downside could drag USD/CNH back to the 6.7000 region in the next few weeks, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “Our view for USD yesterday was that it ‘could break 6.8000 but it might not be able to maintain a foothold below this level’. We indicated, ‘the next support is at 6.7700’. USD weakened more than we expected as it dropped to a low of 6.7665. While oversold, the decline in USD could test the major support at 6.7500 before the risk of a more sustained rebound increases. In other words, a sustained decline below 6.7500 is unlikely. Resistance is at 6.8000, followed by 6.8150.”

Next 1-3 weeks: “Yesterday (09 Jan, spot at 6.8200), we indicated that USD is likely to weaken, albeit at a slower pace. We noted that support levels are at 6.7700 and 6.7500. USD subsequently dropped to a low of 6.7665. We continue to expect USD to weaken and if USD breaks below 6.7500, the focus will shift to 6.7000. Overall, only a break of 6.8500 (‘strong resistance’ level was at 6.8800 yesterday) would indicate that USD is not weakening further.”