USD/CNH could drop further on a breach of 7.0850.
24-hour view: “USD traded between 7.1034 and 7.1337 yesterday, wider than our expected range of 7.1100/1.1350. The underlying tone has weakened somewhat and but for now, any weakness is viewed as a lower trading range of 7.1000/7.1300 (a sustained decline below 7.1000 is not expected).”
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.”