USD/CNH could see 6.7450 re-visited near-term – UOB

The upside momentum in USD/CNH could extend to the 6.7450 level in the next weeks according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden and strong surge in USD that sent it to a high of 6.7172 came as a surprise. While overbought, the rapid advance has room to test 6.7200 first before a more sustained pull-back can be expected. For today, the next resistance at 6.7450 is unlikely to come under threat. Support is at 6.6840 followed by 6.6730.”

Next 1-3 weeks: “We have held a negative view in USD since early last week. As USD rebounded after touching a low of 6.6275, we highlighted last Friday (23 Oct, spot at 6.6760) that ‘slowing downward momentum and oversold conditions suggests that 6.6030 could be out of reach this time round’. We added, ‘a break of 6.6980 would indicate the risk for further USD weakness has eased’. USD blew past 6.6980 yesterday (26 Oct) and hit a high of 6.7172. The price action suggests that 6.6275 is a short-term bottom and this level may not come back into the picture within these couple of weeks. The current movement is viewed as part of a ‘corrective recovery’ that has scope to extend to 6.7450. Overall, USD is expected to trade with an upward bias for now as long as it does not move below the ‘strong support’ level at 6.6530. On a shorter-term note, 6.6660 is already quite a solid level.”