Key Moments
- UOB analysts report USD/CNH is trading with a soft underlying tone, with room to test support near 6.7420 in the near term.
- Over a 1-3 week horizon, the pair is still expected to drift gradually toward 6.7300 as long as resistance at 6.7640 remains intact.
- On a 1-3 month view, a more durable USD/CNH recovery would require a break above the 21-week EMA around 6.8430.
Short-Term Trading Bias and Immediate Levels
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann describe USD/CNH as trading with a soft tone, suggesting that the U.S. Dollar has room to probe support near 6.7420 in the short term. They do not, however, anticipate a sustained move below that level at this stage.
They note that their prior expectation – that USD “could test last week’s low, near 6.7420,” but that “a continued decline below this level is unlikely” – has been broadly validated. According to their assessment, the pair moved in a narrow band of 6.7450/6.7500 and finished “largely unchanged at 6.7482 (+0.01%).”
Despite the subdued intraday range, the analysts observe that “the underlying tone appears to be soft, and there is a chance for USD to test 6.7420. However, a continued decline below this level still appears unlikely. On the upside, resistance is at 6.7550.”
| Horizon | View | Key Levels |
|---|---|---|
| 24-hour | Soft tone, possible test of support; extended downside seen as unlikely | Support: 6.7420; Resistance: 6.7550 |
| 1-3 weeks | Gradual drift lower expected while strong resistance holds | Downside target: 6.7300; Strong resistance: 6.7640 |
| 1-3 months | Tentative upside momentum; recovery needs confirmation | Recovery trigger: 21-week EMA at 6.8430 |
1-3 Week Outlook: Gradual Decline Contingent on Resistance
For the 1-3 week horizon, the UOB team reiterates its earlier stance from Monday (03 Aug, spot at 6.7490). At that time, they pointed out that USD had moved lower the previous week, but “there has been no clear increase in downward momentum.”
Even so, they maintained the view that USD “could continue to edge lower toward 6.7300 as long as 6.7640 (“strong resistance” level) is not breached.” They confirm that “our view remains unchanged,” indicating that their gradual downside bias persists, conditional on the 6.7640 resistance level holding.
1-3 Month Perspective: Conditions for a Sustained Recovery
Over a 1-3 month timeframe, UOB observes that upward momentum in USD/CNH is only tentative. For a more convincing and sustained recovery in the Dollar against the offshore yuan, they emphasize the need for a decisive move above the 21-week exponential moving average, located at 6.8430.
Until such a break occurs, the medium-term outlook is described as cautious, with the market still needing clearer confirmation before a stronger bullish phase can be asserted.
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