According to FX Strategists at UOB Group Quek Ser Leang and Peter Chia, USD/CNH is now seen trading between 6.9000 and 6.9700 in the next few weeks.

Key Quotes

24-hour view: “Last Friday, we expected USD to ‘consolidate further’. In other words, we did not expect the sharp drop in USD to 6.9180 and the subsequent strong bounce from the low. The strong bounce amidst oversold conditions suggests USD is unlikely to weaken much further. For today, USD is more likely to trade between 6.9150 and 6.9450.”

Next 1-3 weeks: “We have held a positive view in USD since the middle of last month. In our latest narrative form last Wednesday (07 Sep, spot at 6.9770), we indicated that as long as 6.9300 is not breached, there is still chance for USD to break 7.0000. USD subsequently rose to 6.9967 before easing off. Last Friday, USD lurched lower and cracked the ‘strong support’ at 6.9300. The break of the ‘strong support’ indicates that the month-long rally in USD has ended. USD appears to have moved into a consolidation phase and is likely to trade between 6.9000 and 6.9700 for now.”