Chinese Yuan: 6.6640 Against US Dollar in Sight as Gains Build Gradually – UOB

Downside risks remain in focus for USD/CNH, according to United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann, as the pair edges lower. They see intraday risks tilted towards a short-lived dip below 6.6700 but do not anticipate a sustained break. Provided USD/CNH remains below strong resistance at 6.6850, they expect room for a gradual decline towards 6.6640 over the next one to three weeks. On a 1–3 month horizon, their broader downward bias remains intact while the pair trades below the cloud near 6.7815.

Can the offshore Yuan maintain its mild strengthening bias?

"24-HOUR VIEW: We indicated yesterday that USD “could dip below 6.6720 and test 6.6700.” However, we pointed out that “a continued decline below 6.6700 is unlikely.” We noted that “resistance is at 6.6805.” Our view did not materialise, as USD rose to 6.6795, and then dropped back down to close largely unchanged at 6.6750 (+0.01%). The slight increase in downward momentum suggests USD could dip below 6.6700 today. Based on the prevailing momentum, a sustained decline below this level is unlikely. On the upside, resistance is at 6.6780."

"1-3 WEEKS VIEW: Our update from yesterday (21 Oct, spot at 6.6750) still stands. As highlighted, “as long as USD holds below 6.6850 (‘strong resistance’ level), it could decline gradually toward 6.6640.” A breach of the ‘strong resistance’ would indicate that the downward pressure from early last week has faded."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)