USD/CNH has likely moved into a consolidative phase – UOB
|Further rangebound between 6.4300 and 6.4900 is now expected in USD/CNH, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “We expected USD to weaken last Friday but we were of the view that ‘any decline is unlikely to challenge the strong support at 6.4550’. The subsequent weakness exceeded our expectation as USD dropped to 6.4531 before rebounding. While downward momentum has not improved by much, there is scope for the weakness in USD to test the strong support at 6.4500 first before stabilizing. Resistance is at 6.4660 followed by 6.4750.”
Next 1-3 weeks: “We have expected USD to strengthen since the middle of the month. In our latest narrative from last Friday (25 Jun, spot at 6.4695), we indicated that ‘risk of a short-term top has increased’ and ‘a break of 6.4500 would indicate that USD strength has run its course’. USD subsequently dropped to 6.4531 during NY session before rebounding slightly. While 6.4500 is still intact, upward momentum has waned considerably and last week’s 6.4946 is likely a short-term top. That said, it is too early expect a sizeable pullback. From here, USD could trade within a 6.4300/6.4900 range for a period of time.”
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