USD/CNH: Next strong hurdle comes at 6.4300 – UOB

UOB Group’s FX Strategists noted further upside in USD/CNH is expected to meet a tough barrier at 6.4300 in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘in view of the impulsive momentum, USD could strengthen further to 6.4050, as high as 6.4100’. Our view turned out to be right as USD rose to 6.4105 during London hours before pulling back sharply. The sharp pullback has dented the upward momentum and USD is unlikely to strengthen further. For today, USD is more likely to trade sideways between 6.3700 and 6.4050.”

Next 1-3 weeks: “We have expected a stronger USD since Monday (14 Mar, spot at 6.3620). As USD surged, in our latest narrative from yesterday (15 Mar, spot at 6.3980), we highlighted that the rally in USD appears to have ample fuel and USD could continue to rally to 6.4100, as high as 6.4300. USD subsequently soared to 6.4105 before pulling back. While upward momentum has eased somewhat, the risk is still on the upside. That said, the next major resistance at 6.4300 may not come into the picture so soon. In other words, USD could consolidate below 6.4105 for 1 to 2 days before heading higher. Overall, only a breach of the ‘strong support’ level at 6.3600 (no change in level from yesterday) would indicate that the current strong upward pressure has eased.”