The US Dollar (USD) is likely to trade with a bearish bias, but is unlikely to break below 7.0540. In the long term, the outlook for the US dollar remains negative; The next level to watch is 7.0400, noted UOB Group FX analysts Kwik Sir Liang and Peter Chia.
USD/CNH is unlikely to break below 7.0540
24-hour view: “The US dollar closed unchanged at 7.0715 two days ago. Yesterday, we noted that “price action does not provide any new evidence, and we still expect the US dollar to trade between 7.0620 and 7.0740.” The dollar then rose to 7.0717, falling to 7.0600, before closing at 7.0621 (-0.13%). Minor downside momentum suggests that the US dollar is likely to trade with a bearish bias today, but the momentum will likely not be strong enough to break last week’s low, near the 7.0650 and 7.0710 resistance levels.
1-3 week view: “We turned negative for the USD at the beginning of last week. In our latest narrative last Thursday (04 Dec, spot at 7.0565), we noted that “The outlook for the USD remains negative, the next level to watch is 7.0400.” Although the USD has not made further progress on the downside, we will maintain the same view as long as 7.0770 remains. (No change in the ‘strong resistance’ level is intact.)
