USD/CNH does not have enough momentum to break below 7.2260 – UOB Group

US Dollar (USD) could decline gradually vs Chinese Yuan (CNH); it does not appear to have enough momentum to break below 7.2260. In the longer run, downward pressure remains intact; should USD break below 7.2260, the next level to watch is 7.2000, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Downward pressure remains intact

24-HOUR VIEW: "After the sharp drop in USD two days ago, we highlighted the following yesterday: 'The decline appears excessive, but with no signs of stabilisation just yet, further weakness is not ruled out. However, given the deeply oversold conditions, any decline is likely part of a lower range of 7.2400/7.2800.” Instead of trading in a range, USD fell to a low of 7.2330. Downward momentum has increased, albeit not much. Today, provided that USD remains below 7.2780 (minor resistance is at 7.2660), it could decline gradually. However, it does not appear to have enough momentum to break below 7.2260."

1-3 WEEKS VIEW: "We highlighted yesterday (05 Mar, spot at 7.2650) that USD 'could remain under pressure,' and we pointed out that 'there is a pair of strong supports at 7.2400 and 7.2260.' USD then fell to a low of 7.2330. The downward pressure remains intact, and should USD break below and hold below 7.2260, the next level to watch is 7.2000. To maintain the downward pressure, USD must not remain below 7.2880 (‘strong resistance’ level was at 7.2980 yesterday)."