USD/CNH remains upside corrective near-term – UOB

FXStreet reports that FX Strategists at UOB Group believe the rebound in USD/CNH is seen facing a tough hurdle in the 7.040 region.

24-hour view: “Yesterday, we highlighted that USD ‘could dip below 6.9650 but the major support at 6.9500 is unlikely to come into the picture’. USD subsequently dipped to 6.9645 before rocketing (on the back of news) and closed higher by +0.63% (7.0167). While the rapid rise appears to be running ahead of itself, there is likely enough momentum to carry USD higher to 7.0250, possibly as high as 7.0300. On the downside, 6.9900 is expected to be strong enough to hold for today (minor support is at 7.0000).”

Next 1-3 weeks: “We have expected USD to weaken since early this and in our latest update yesterday (22 Jul, spot at 6.9720), we indicated that ‘the odds for a move to 6.9500 have increased’. USD subsequently eked out a fresh low of 6.9645 before staging a dramatic reversal that sent it to a high of 7.0174. The break of our ‘strong resistance’ level at 6.9920 indicates that USD is no more under pressure. The current USD strength is viewed as part of a corrective rebound but at this stage, any advance is expected to face solid resistance at 7.0400. On the downside, the ‘strong support’ level is at 6.9750.”