USD is likely to continue to weaken – UOB Group

The sudden decline led to an increase in momentum; The USD is likely to continue to weaken, potentially at 7.0100, note UOB Group FX analysts Quek Ser Leang and Peter Chia.

USD/CNH will continue to decline towards 7.0100

24 HOURS: “The USD fell sharply two days ago. Yesterday, we indicated that “while further USD weakness looks likely today, oversold conditions suggest any further downside could be relatively limited.” I added, “levels to watch are 7.0380 and 7.0270.” However, the USD did not fall much further, returning to 7.0650. The current price action is likely part of a consolidation phase. Today, we expect the USD to trade in the 7.0450/7.0680 range.”

WEEKS 1-3: “We turned negative on the USD last Friday (Sept 20, spot at 7.0700), indicating ‘possible trade to the downside towards 7.0500’. After the USD fell to a low of 7.0387, we indicated yesterday (September 23, spot at 7.0450) that “the sharp decline has added further downside momentum and the USD is likely to continue to weaken, potentially at 7.0100”. While the subsequent sharp pullback has dented the momentum somewhat, our view remains unchanged for now. However, a breach of 7.0770 (no change to the ‘strong resistance’ level) would mean the USD is not weakening further.”