In opinion of FX Strategists at UOB Group, USD/CNH risks further retracements in the next weeks.
24-hour view: “The sharp drop in USD that sent it plummeting to 6.4090 came as a surprise (we were expecting USD to consolidate). While the rapid decline appears to be overdone, the weakness in USD could test 6.4015 first before stabilizing. The next support at 6.3950 is unlikely to come under threat. Resistance is at 6.4180 followed by 6.4230.”
Next 1-3 weeks: “Yesterday, we highlighted that downward momentum has more or less dissipated and USD is likely to trade sideways within a 6.4100/6.4600 range. We did not anticipate the sharp drop that sent USD tumbling to 6.4090. Downward momentum has picked up again and the risk from here is for USD to break the major support at 6.4015. Looking ahead, a daily closing below 6.4015 would indicate that USD could decline towards the next support at 6.3800. The current downward pressure is deemed intact as long as USD does not move above the ‘strong resistance’ level at 6.4300.”