Chinese Yuan: Bullish tone with upside tests against US Dollar – UOB
United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann note that USD/CNH is trading with a soft underlying tone, with scope for the Dollar to test support levels near 6.7420 in the short term, while a sustained break lower is seen as unlikely.
UOB analysts Quek Ser Leang and Lee Sue Ann have noted a bearish outlook for the Chinese Yuan against the US Dollar. The USD/CNH pair is currently trading in a narrow range between 6.7450 and 6.7500, with prices closing near 6.7482, only slightly higher than the previous day. Despite this modest gain, the overall tone remains soft, indicating a potential for the Dollar to test the 6.7420 support level in the near term. However, an extended decline below this key level is considered unlikely.
Looking ahead over the next one to three weeks, UOB analysts maintain their view that the Dollar may continue to edge lower, potentially reaching the 6.7300 mark if the strong resistance level of 6.7640 is not breached. While there is no clear indication of increasing downward momentum, the analysts remain cautious and hold the same stance as previously expressed.
On a longer-term basis, spanning one to three months, UOB analysts anticipate a tentative upward momentum for the USD/CNH pair, which would require a decisive break above the 21-week Exponential Moving Average (EMA) of 6.8430 to confirm a sustained recovery. At present, the pair remains below this critical level, and further progress towards recovery is contingent upon the success of breaching the 6.8430 EMA.
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