USD/CNH: Upside bias intact above 6.8700 – UOB

The prospects for further gains in USD/CNH appear unchanged while the pair trades above the 6.8700 level, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘there is room for USD to break above 6.9000 but the next major resistance level at 6.9300 is unlikely to come under threat’. Our view was not wrong as USD rose to 6.9080. Despite the advance, upward momentum has not improved much. Today, USD could edge higher to 6.9150; the major resistance at 6.9300 is still unlikely to come under threat. Support is at 6.8990, followed by 6.8910.”

Next 1-3 weeks: “We have held a positive USD view since early this month. In our latest narrative from yesterday (22 Feb, spot at 6.8920), we indicated that if USD were to break above 6.9000, the next level to monitor is at 6.9300. While USD took out 6.9000 as expected (high of 6.9080), upward momentum has not improved much. That said, the USD strength is intact as long as it stays above 6.8700 (‘strong support’ level previously at 6.8480). Looking ahead, a breach of 6.9300 will shift the focus to 6.9500.”