According to FX Strategists at UOB Group, the upside momentum in USD/CNH could re-visit the 6.4400 level in the next weeks.
24-hour view: “While we expected USD to strengthen yesterday, we were of the view that ‘a sustained advance above 6.4050 is unlikely’. The subsequent USD strength exceeded our expectations as it surged to 6.4197 before pulling back to close at 6.4060 (+0.17%). The rapid rally appears to be overdone and USD is unlikely to strengthen further. For today, USD is more likely to consolidate and trade between 6.4000 and 6.4200.”
Next 1-3 weeks: “We noted yesterday that ‘shorter-term upward momentum is beginning to improve’ but we were of the view that USD ‘has to close above the strong resistance at 6.4105 before a sustained advance can be expected’. USD subsequently rose to 6.4197 before pulling back to close at 6.4060. While USD did not close above 6.4105, upward momentum has improved further and USD is expected to trade with an upward bias towards 6.4400. The upward bias is deemed intact as long as USD does not move below 6.3900 (‘strong support’ level was at 6.3830 yesterday).”
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