Chinese Yuan: Upside bias against US Dollar – UOB

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann highlight a sharp USD/CNH drop to 6.7691, shifting the short-term bias to the downside. They see scope for further weakness, though the 6.7600 support is unlikely to be reached immediately. Over 1-3 weeks, the pair is expected to trade with a downside bias toward 6.7600, while a move above 6.7860 would negate the bearish momentum.

Offshore Yuan strengthens as Dollar slips

"24-HOUR VIEW: We did not expect USD to drop sharply to 6.7691 (we had expected range-trading). The rapid increase in momentum suggests further USD weakness, even though the major support at 6.7600 is likely out of reach (there is another support level at 6.7660). On the upside, a breach of 6.7800 (minor resistance is at 6.7760) would indicate that the decline is stabilising."

"1-3 WEEKS VIEW: In our most recent narrative from last Friday (10 Jul, spot at 6.7930), we highlighted that “for the time being, we expect USD to trade in a range, most likely between 6.7700 and 6.8100.” Yesterday, USD broke below 6.7700 with a low of 6.7691. Downward momentum is increasing, and from here, USD is likely to trade with a downside bias toward 6.7600. To keep the momentum going, USD must not break above 6.7860 (‘strong resistance’ level)."