USD/CNH: Next resistance comes at 6.5880 – UOB

In opinion of FX Strategists at UOB Group Quek Ser Leang and Lee Sue Ann, USD/CNH’s potential upside could target the 6.5880 level in the next weeks.

Key Quotes

24-hour view: “We expected USD to ‘advance further’ last Friday but we were of the view that ‘a clear break of 6.5000 is unlikely for now’. However, easily blew past 6.5000 as it rocketed to a high of 6.5482. Conditions remain deeply overbought but there is scope for the rally in USD to extend to 6.5600 (next resistance is at 6.5880). Support is at 6.5220 followed by 6.5100.”

Next 1-3 weeks: “We have held a positive view in USD since early last week. Last Friday (22 Apr, spot at 6.4800), we highlighted stronger than expected momentum is likely to lead to further USD strength. We added, ‘the next resistance levels to monitor are at 6.5000 followed by 6.5200’. USD subsequently blew past both resistance level as it surged to 6.5482. Upward momentum remains strong and despite the outsized rally last week, USD could advance further. The next resistance levels are at 6.5600 followed by last year’s high near 6.5880. On the downside, the ‘strong support’ level has moved higher to 6.4750 from 6.4300 last Friday. Only a breach of the ‘strong support’ would indicate that the current rally has run its course.”