The UOB Group analysts predict that the U.S. dollar will maintain a narrow trading band between 7.1570 and 7.1770 against the offshore Chinese yuan during the upcoming period because downward market momentum remains moderate.
Quek Ser Leang and Peter Chia observed that the recent USD/CNH dip to 7.1527 did not produce lasting selling pressure yet the long-term indicators indicate a possible decline to 7.1450 provided that 7.1950 resistance holds.
The analysts observed in their note that short-term downward market pressure has decreased. But the broader momentum continues to point slightly lower.
The dollar price reached 7.1527 on Thursday before it rebounded which indicated that investors were hesitant to advance the yuan beyond that point. The market participants maintain their defensive stance because they predict the dollar will decline further while U.S. policy uncertainty continues to affect the currency.
The analysts stated that a break of 7.1450 would need stronger bearish momentum to occur but this condition has not developed yet. The pair shows signs of staying within the specified range until a stronger directional signal appears.
