The prospects for the continuation of the decline in USD/CNH seems to have lost momentum as of late according to UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “We highlighted yesterday that ‘while the underlying tone has firmed somewhat, the price movements still appear to be consolidative’ and we expected USD to trade between 6.8750 and 6.9100. Our view for consolidation was not wrong, even though USD traded in a narrower range than expected (6.8885/6.9135). Further consolidation appears likely, expected to be between 6.8850 and 6.9100.”

Next 1-3 weeks: There is not much to add to our update from yesterday (16 Mar, spot at 6.8920). As highlighted, while the downside risk has decreased, only a break of 6.9300 (no change in ‘strong resistance’ level) would indicate that USD is not weakening further. Looking ahead, support level is at 6.8350.”