A convincing breakout of 6.3900 could spark further gains in USD/CNH in the near term, comment FX Strategists at UOB Group Quek Ser Leang and Peter Chia.
Key Quotes
24-hour view: “Yesterday, we highlighted that ‘the risk is tilted to the downside but any USD weakness is unlikely to break 6.3600’. USD subsequently dipped to 6.3630 before staging a surprisingly robust rebound. The rebound has scope to extend but a clear break of 6.3900 appears unlikely (minor resistance is at 6.3860). Support is at 6.3750 followed by 6.3700.”
Next 1-3 weeks: “Our latest narrative was from Monday (04 Apr, spot at 6.3700) where USD is likely to trade sideways between 6.3450 and 6.3900. Shorter term upward momentum is beginning to improve and the risk of a break of 6.3900 has increased. A clear break of 6.3900 suggests USD could advance to 6.4000. On the downside, a breach of 6.3630 (‘strong support’ level) would indicate that the build-up in momentum has eased.”