USD/CNH: Likely to trade in a lower range of 7.2680/1.3200 – UOB Group
Instead of continuing to decline, US Dollar (USD) more likely to trade in a lower range of 7.2680/1.3200. In the longer run, outlook is mixed; USD could trade in a 7.2430/7.3580 range for now, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Outlook for USD is mixed for now
24-HOUR VIEW: "Following Monday’s volatile price movements, we indicated yesterday that 'the rapid swings have resulted in a mixed outlook.' We expected USD to 'trade between 7.2950 and 7.3400.' The subsequent price movements did not turn out as we expected. USD rose to 7.3361 and dropped sharply, reaching a low of 7.2755. It rebounded from the low to close at 7.2875 (-0.20%). Despite the decline, there is no clear increase in momentum. Instead of continuing to weaken, USD is more likely to trade in a lower range of 7.2680/7.3200. In other words, a sustained break below 7.2680 is unlikely."
1-3 WEEKS VIEW: "Yesterday (04 Feb, spot at 7.3160), we indicated that 'if USD breaches 7.2950 (‘strong support’ level), it would mean that it “is likely to trade in a range instead of advancing further.' USD subsequently dropped to a low of 7.2755. The outlook for USD is mixed after the volatile price movements over the past couple of days. For now, it could trade in a broad range of 7.2430/7.3580."
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