UOB Group’s FX Strategists believe USD/CNH could still grind lower to the 6.3525 level in the next weeks.

Key Quotes

24-hour view: “Our expectations for USD to ‘weaken further’ yesterday were incorrect as it traded between 6.3733 and 6.3950. We still detect a weak underlying tone and we see room for USD to edge lower. That said, any decline is unlikely to break Tuesday’s low of 6.3685. Resistance is at 6.3960 followed by 6.4040.”

Next 1-3 weeks: “Our view from yesterday (20 Oct, spot at 6.3780) still stands. As highlighted, while the outsized sell-off on Tuesday is overdone, there is scope for USD to drop to May’s low near 6.3525. Looking ahead, USD has to close below this support before further weakness can be expected. The downside risk is intact as long as USD does not move above the ‘strong resistance’ level at 6.4200.”