USD/CNH now faces some consolidation – UOB

USD/CNH is now likely to navigate within the 6.9100-6.9630 range in the short term, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we expected USD to trade in a sideways range of 6.9180/6.9350. We did not anticipate the elevated volatility as after dropping to 6.9169, USD surged to a high of 6.9420. After the choppy price action, the outlook for USD is mixed. Today, USD could trade in a range of 6.9230/6.9450.”

Next 1-3 weeks: “Our latest narrative was from last Friday (05 May, spot at 6.9150) wherein USD ‘is likely to trade under pressure but the chance of it breaking below the formidable support is low’. Since then, USD has not been able to make any headway to the downside and yesterday, it broke above our ‘strong resistance’ level of 6.94000. The breach of the ‘strong resistance’ level indicates that the downward pressure has eased. There does not appear to be any directional bias and for the time being, USD could trade in a range of 6.9100/6.9630.”