CNY: Target Set at 6.7200 per USD – UOB

USD/CNH previously dipped to 6.7180 and settled near 6.7210, prompting UOB analysts Ho Woei Chen and Lee Sue Ann to maintain a bearish bias on the pair. The exchange rate is currently trading at 6.72494, slightly rebounding from earlier lows, but the overall soft tone remains unchanged.

**Short-term momentum skewed to downside**

UOB's report shows USD/CNH retreated after failing to extend a modest rebound, with downside momentum building. The bank's short-term downside target points to 6.7200, echoing the earlier low of 6.7180. Market signals indicate that a decisive break below 6.7200 could open further downside space; conversely, a rise above the 6.7550 resistance level would challenge the current bearish view.

**Fundamentals support a mild yuan appreciation**

From a longer-term perspective, some institutions hold an optimistic view on the yuan. According to a Goldman Sachs research note published in May, the bank raised its 12-month USD/CNY forecast to 6.50, with the core logic being that China's export growth continues to widen the current account surplus, coupled with imported inflation constraining the People's Bank of China's room for rate cuts. This assessment aligns directionally with UOB's short-term bearish stance on the dollar, both pointing to appreciation potential for the yuan.

**Key levels determine the next pace**

Current market focus centers on the fate of the 6.7200 level. UOB had previously monitored support at 6.7420, and with the exchange rate now trading below that level, the technical bearish signal is clearer. However, the spot USD/CNH price of 6.72494 shows the pair has not moved far from recent lows, and the tug-of-war between bulls and bears within the 6.7200-6.7300 range could remain volatile. Analysts caution that attention should be paid to the overall trend of the US dollar index and the guidance of the PBoC's central parity rate on offshore yuan sentiment.