If USDCNH keeps the downside pressure it could retest the 7.0130 region in the short term, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is a chance for USD to drop to 7.0450 before the risk of a rebound increases’. However, USD dropped to 7.0200 first before rebounding. USD appears to have moved into a consolidation phase and is likely to trade within a range of 7.0260/7.0800 today.”

Next 1-3 weeks: “Yesterday (14 Nov, spot at 7.0745), we expected USD to weaken further. We indicated the levels to watch are at 7.0300, followed by Oct’s low near 7.0130. USD subsequently dropped to a low of 7.0200 before rebounding. Oversold short-term conditions could lead to a couple of days of consolidation first but as long as 7.1200 (‘strong resistance’ level was at 7.1660 yesterday) is not breached, there is room for USD to drop to 7.0130. Looking ahead, a clear break of 7.0130 will shift the focus to 6.9700.”