USD/CNH could now re-visit 6.4900 – UOB

Further upside in USD/CNH could test the 6.4900 region in the short-term horizon, commented FX Strategists at UOB Group.

Key Quotes

24-hour view; “Yesterday, we held the view that USD ‘could dip towards 6.4560 first before a rebound can be expected’. USD subsequently dipped to 6.4585 before rebounding strongly to 6.4855. The rebound has gathered momentum and USD is likely to strengthen further. However, the chance for a clear break of 6.4900 is not high (next resistance is at 6.4945). Support is at 6.4750 followed by 6.4700.”

Next 1-3 weeks: “We highlighted yesterday (06 Jul, spot at 6.4645) that USD ‘is expected to consolidate and trade between 6.4480 and 6.4850’. We did not anticipate the increase in volatility as USD rose quickly above the top of our expected range (high of 6.4855). Shorter-term upward momentum has improved and from here, USD is expected to trade with an upward bias towards 6.4900. A break of this level is not ruled out but any further advance is expected to encounter solid resistance at 6.4950. Overall, only a breach of 6.4640 would indicate that the current upward pressure has eased.”