UOB Group’s FX Strategists noted USD/CNH could grind lower and retest the 6.3500 level in the short-term horizon.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the swift and sharp drop appears to be running ahead of itself but there is room for USD to dip to 6.3560’. Our expectations did not materialize as USD dipped briefly to 6.3575 before rebounding. Downward pressure has eased somewhat and USD is likely to consolidate for today, expected be between 6.3590 and 6.3700.”

Next 1-3 weeks: “Our update from yesterday (13 Jan, spot at 6.3625) still stands. As highlighted, downward momentum is beginning to build and USD is expected to trade with a downward bias towards 6.3500. A breach of 6.3780 (‘strong resistance’ level was at 6.3760 yesterday) would indicate that our view is wrong.”