USD/CNH now targets the 6.4200 level – UOB

The corrective rebound in USD/CNH carries the potential to revisits the 6.4200 level in the next weeks.

Key Quotes

24-hour view: “Our expectation for USD to ‘trade within a 6.3792/6.3900 range’ was incorrect as it soared to 6.4000. The rapid advance appears to be running ahead of itself and while there is room for USD to test 6.4100, the next resistance at 6.4200 is unlikely to come into the picture. Support is at 6.3920 followed by 6.3850.”

Next 1-3 weeks: “We have held a negative view in USD since early last week. In our latest narrative from Tuesday (01 Jun, spot at 6.3670), we highlighted that ‘while the focus is at 6.3300 now, oversold conditions suggest that this level may not come into the picture so soon’. We added, ‘only a breach of the 6.4000 would indicate that the weakness in has run its course’. USD rose to 6.4000 yesterday and the weak phase in USD is deemed to have ended. The current movement is viewed as the early stages of corrective rebound that could extend to 6.4200, with lower odds for extension to 6.4400. On the downside, a break of 6.3760 would indicate that USD is note ready to rebound.”