USD/CNH: Strong support is located at 6.4700 – UOB

UOB Group’s FX Strategists note further weakness in USD/CNH is expected to meet solid contention around 6.4700.

Key Quotes

24-hour view: “USD traded between 6.4857 and 6.7988 last Friday, narrower than our expected sideway-trading range of 6.4830/6.5030. Downward momentum has improved somewhat but the major support at 6.4700 is unlikely to come into the picture (6.4800 is already quite a strong level). On the upside, a break of 6.5000 would indicate that the downside risk has dissipated.”

Next 1-3 weeks: “Two days ago (21 Apr, spot at 6.5000), we indicated that the ‘downside risk in USD remains intact and the next support below 6.4850 is at 6.4700’. USD broke 6.4850 yesterday and dropped to 6.4802. Despite the breach of 6.4850, downward momentum has not improved by much. That said, the risk is still for a lower USD but any weakness is expected to encounter solid support at 6.4700. O the upside, a breach of 6.5200 (no change in ‘strong resistance’ level) would indicate that the weakness in USD that started more than a week ago has come to an end.”