USD/CNH: Upside momentum improves further – UOB

UOB Group’s FX Strategists noted USD/CNH could now advance well above the 6.5000 level in the short-term horizon.

Key Quotes

24-hour view: “Our expectation for USD to ‘trade within a 6.4670/6.4870 range’ was incorrect as it soared to 6.5004 before pulling back. The rapid rise appears to be running ahead of itself and while there is room for USD to move above 6.5000 again, the next resistance at 6.5060 is likely out of reach. Support is at 6.4840 followed by 6.4790.”

Next 1-3 weeks: “Two days ago (07 Jul, spot at 6.4800), we highlighted that ‘shorter-term upward momentum has improved and from here, USD is expected to trade with an upward bias towards 6.4900’. USD broke above 6.4900 yesterday (08 Jul) and soared to 6.5004. Upward momentum has improved further and a clear break of 6.5060 could potentially lead to a rapid rise to 6.5200. On the downside, a breach of 6.4730 (‘strong support’ level previously at 6.4640) would indicate that the risk for further USD strength has dissipated.”