According to FX Strategists at UOB Group, USD/CNH could intensify the downside if 7.0850 is cleared in the next weeks.
24-hour view: “USD traded between 7.0890 and 7.1274 yesterday, higher than our expected consolidation range of 7.0850/7.1250. The movement is still viewed as an on-going consolidation phase even though the slightly firmed underlying tone suggests a higher trading range of 7.1100/7.1350.”
Next 1-3 weeks: “The pace and extent of the pull-back from last week’s 7.1966 high came as a surprise. For now, we continue to hold the view that USD is ‘trading sideways’ but if USD closes below 7.0850, it could signal the start of a deeper decline in USD. At this stage, the prospect for such a move is not that high but it would increase unless USD can move above 7.1500 within these few days.”