USD/CNH rebounded to 6.7153 after dipping to 6.7043, reversing a move that had been expected to keep the pair between 6.7030 and 6.7100. The advance may extend, though intraday gains are seen meeting resistance near 6.7200, with support flagged at 6.7085.
UOB’s prior bearish USD view has eased as downside momentum wanes. In an earlier update dated 07 Sep, with spot at 6.7070, the bank said a break and hold below 6.7000 could open a fall towards 6.6900. After the sharp rise to 6.7153, the resistance level at 6.7160 remains intact, but building upward momentum points to a modest grind higher over the next one to three weeks within a 6.7040–6.7290 range.
Shift in Outlook and Trading Strategies
We have shifted our outlook on the USD/CNH pair from a negative stance to expecting a gentle rebound, as the downward momentum has largely faded. With the pair recently bouncing to 6.7153, we advise derivative traders to pivot their strategies away from aggressive short positions. Over the next one to three weeks, we expect the market to trade within a defined range of 6.7040 to 6.7290.
To capitalise on this shifting environment, traders should consider range-bound strategies such as iron condors or short straddles within this projected band. Buying on dips close to the 6.7040 support level while taking profits near the 6.7200 to 6.7290 resistance zone seems highly practical. This cautious approach aligns with the market’s current consolidation phase, preventing traders from getting caught on the wrong side of a sudden breakout.
Macroeconomic Support and Key Levels
This gentle recovery in the USD/CNH pair is supported by broader macroeconomic data, including recent industrial production and retail sales figures out of China that suggest stabilizing but still modest growth. Furthermore, historical data shows that when the pair tests the 6.7000 psychological floor and fails to break lower, it frequently triggers a technical short-covering rally. We recommend monitoring upcoming Federal Reserve policy statements and People’s Bank of China liquidity injections closely, as any unexpected divergence could quickly push the pair toward the upper limit of 6.7290.
