Chinese Yuan: Outlook stays mildly positive against US Dollar – UOB

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann describe USD/CNH price action as fading in downside momentum and now largely range-bound between 6.6900 and 6.7000 in the short term. Over 1–3 weeks, they still warn that a break and close below 6.6900 could trigger a move toward 6.6800. On a 1–3 month view, they expect the pair to keep edging lower while below 6.7815.

USD/CNH downside risk below 6.6900

"24-HOUR VIEW: Following the relatively sharp drop last Friday, we highlighted the following yesterday: “Downward momentum has increased, but not significantly. Today, USD could dip below 6.6900, but it remains to be seen whether downward momentum will strengthen sufficiently for it to maintain a foothold below this level. To keep the momentum going, USD must hold below 6.6985.” Our view did not materialise, as USD dipped to 6.6907 before recovering to close largely unchanged at 6.6950 (+0.02%). Downward momentum is fading, and the current price movements are likely part of a range-trading phase between 6.6900 and 6.7000."

"1-3 WEEKS VIEW: Yesterday (12 Oct, spot at 6.6940), we highlighted that “if USD breaks and closes below 6.6900, it may lead to a move toward 6.6800.” We will continue to hold the same view as long as USD holds below 6.7050 (no change in ‘strong resistance’ level)."