While further declines for the US Dollar are possible, the significant support level at 7.0885 for USD/CNH is probably safe for the time being. UOB Group’s FX analysts, Quek Ser Leang and Peter Chia, maintain a long-term negative outlook for the USD, identifying 7.0885 as the next key level to monitor.
USD/CNH Outlook:
24-Hour Forecast: After the USD’s dip to 7.1107 on Wednesday, yesterday’s analysis (Thursday) suggested that “the rapid increase in downward momentum indicated potential USD declines, though major support at 7.0990 was likely out of reach.” However, the pace of the downward momentum exceeded expectations, with the USD plunging to 7.0918. Although additional declines can’t be ruled out, the market’s current deeply oversold state suggests that the primary support at 7.0885 is unlikely to be tested imminently. Resistance levels are identified at 7.1030 and 7.1085.
1-3 Week Forecast: Yesterday (November 13, spot at 7.1110), our assessment indicated that the USD “is negative now, with 7.0995 as the downside level to watch.” While this view was correct, the USD breached 7.0995 more swiftly than anticipated, falling to 7.0918. We continue to hold a negative stance on the USD, now expecting a move towards 7.0885. This outlook will remain valid unless the 7.1170 level (yesterday’s “strong resistance” was 7.1235) is broken
