USD/CNH: There is a tough support at 7.0000 – UOB

Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group’s Global Economics & Markets Research noted further weakness in USD/CNH should face solid contention around 7.0000.

Key Quotes

24-hour view: “Yesterday, we highlighted yesterday that the ‘oversold decline in USD could extend but the major support at 7.0000 is unlikely to come into view’. Our view was not wrong as USD dropped to 7.0128. That said, we did not expect the strong rebound from the low (high has been 7.0929). Downward pressure has eased and USD is likely to trade between 7.0100 and 7.0850 for today.”

Next 1-3 weeks: “We continue to hold the same view as yesterday (05 Oct, spot at 7.0400). As highlighted, the risk for USD is on the downside but it remains to be seen if it can break the significant support at 7.0000. Overall, only a breach of 7.1170 (no change in ‘strong resistance’ level from yesterday) would indicate the downside risk in USD has subsided.”