The upside momentum in USD/CNH could extend to the 6.4500 level in the short-term horizon, comment FX Strategists at UOB Group.
Key Quotes
24-hour view: “Our expectation for USD to consolidate was wrong as it surged to 6.4420 during NY hours. The rapid rise appears to be overdone and USD is unlikely to advance much further. For today, USD is more likely to trade within a 6.4150/6.4450 range.”
Next 1-3 weeks: “Two days ago (15 Jun) when USD was trading at 6.4090, we indicated that USD ‘is expected to trade with an upward bias towards 6.4400’. Our view was not wrong as USD soared to 6.4420 during NY session yesterday. While further USD strength is not ruled out, shorter-term conditions are deeply overbought and it is left to be seen if USD can muster enough momentum to break major long-term resistance at 6.4500. That said, a break of this major resistance could potentially lead to a rapid rise towards 6.4660. Meanwhile, USD could consolidate for a couple of days but as long as the ‘strong support’ at 6.4000 (level was at 6.3880 yesterday) is not breached, the risk is still for a higher USD.”
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