USD/CNH: Door open to extra upside near term – UOB

Prospects for a move to 6.9400 ahead of 6.9600 in USD/CNH looks well in place for the time being, note FX Strategists at UOB Group Quek Ser Leang and Lee Sue Ann.

Key Quotes

24-hour view: “We highlighted yesterday that the ‘the rapid rise in USD appears to be a tad overdone’ and we held the view that ‘the next major resistance at 6.9400 is unlikely to come under threat for now’. Our view was not wrong as USD subsequently rose to 6.9325 before easing off. USD appears to have moved into a consolidation and is likely to trade sideways between 6.9000 and 6.9300 for today.”

Next 1-3 weeks: “Our update from yesterday (29 Aug, spot at 6.9140) still stands. As highlighted, the rapid boost in momentum indicates that the USD strength could extend to 6.9400, possibly 6.9600. On the downside, a break of 6.8700 (‘strong support’ level was at 6.8600 yesterday) would indicate that the USD strength that started two weeks ago has run its course.”