Chinese Yuan: Range trade and upside risk against US Dollar – UOB

UOB’s Quek Ser Leang and Lee Sue Ann note that USD/CNH has been confined to a tight range and expect the Dollar to trade between 6.7430 and 6.7530 in the near term. Over the coming weeks, they still see scope for a drift lower toward 6.7300 unless 6.7580 resistance breaks, while a medium-term recovery needs a move above the 21-week EMA at 6.8430.

Dollar stuck in tight CNH range

"24-HOUR VIEW: We indicated yesterday that USD “is likely to trade in a range between 6.7410 and 6.7510.” However, USD traded within a tight 6.7444/6.7489 range. We are not able to derive much from the price action. Today, USD could trade between 6.7430 and 6.7530."

"1-3 WEEKS VIEW: In our most recent narrative from last Monday (03 Aug, spot at 6.7490), we highlighted that USD “could continue to edge lower toward 6.7300.” Although there has been no further increase in downward momentum, there is still a chance for USD to edge lower toward 6.7300. On the upside, a breach of 6.7580 (no change in ‘strong resistance’ level) would indicate that USD is likely to range-trade instead."