Further retracement could push USD/CNH to test the 6.3525 level in the short-term horizon, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘is likely to break Nov’s low near 6.3615’. While our view was not wrong as USD dropped to 6.3610, the subsequent rapid rebound from the low came as a surprise. Downward pressure has eased somewhat with the rebound and USD is unlikely to weaken further. For today, USD is more likely to trade sideways between 6.3650 and 6.3800.”

Next 1-3 weeks: “There is no change in our view from yesterday (01 Dec, spot at 6.3650). As highlighted, the recent improvement in downward momentum suggests that USD could weaken to 6.3525. The downside risk is deemed intact as long as USD does not move above the ‘strong resistance’ at 6.3880 (no change in level from yesterday).”