USD/CNH: Next hurdle of note comes at 6.9000 – UOB

USD/CNH faces the next key up barrier at the 6.9000 level in the near term, note FX Strategists at UOB Group Quek Ser Leang and Peter Chia.

Key Quotes

24-hour view: “We expected USD to strengthen further yesterday. We highlighted that ‘resistance is at 6.8600’. We added, ‘as conditions are overbought, the next resistance at 6.8800 is not expected to come under threat’. Our view turned out to be correct as USD rose to 6.8751 before easing off. Conditions remain overbought but the improved upward momentum is likely to lead to a break of 6.8800. The next major resistance at 6.9000 is not expected to come into the picture for now. On the downside, a breach of 6.8440 (minor support is at 6.8550) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Yesterday (22 Aug, spot at 6.8430), we highlighted that solid upward momentum is likely to lead to further USD strength. We indicated that resistance levels are at 6.8600 and 6.8800. USD subsequently took out 6.8600 and rose to 6.8751. Upward momentum is still solid and a break of 6.8800 would not be surprising. The next level to focus on is at 6.9000. Overall, only a break of 6.8330 (‘strong support’ level was at 6.8100 yesterday) would indicate that USD is unlikely to advance further.”