The continuation of the downtrend carries the potential to drag USD/CNH to the 6.7000 region in the short term, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that USD “could test the major support at 6.7500 before the risk of a rebound increases”. USD subsequently dropped to 6.7590 before rebounding. Downward pressure has eased and the current price movements are likely part of a consolidation phase. In other words, USD is likely to trade sideways today, expected to be within a range of 6.7690/6.8000.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (10 Jan, spot at 6.7850). As highlighted, USD is likely to continue to weaken and a break of 6.7500 will shift the focus to 6.7000. Overall, only a breacch of 6.8350 (‘strong resistance’ level was at 6.8500 yesterday) would indicate that the USD weakness that started last week has ended.”