Further upside momentum could encourage USD/CNH to test the 6.6300 region in the near term, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
Key Quotes
24-hour view: “The strong surge in USD to 6.6090 came as a surprise (we were expecting a higher USD but we were of the view that 6.5600 is out of reach). The sharp pullback from the high amid overbought conditions suggests that the strong rally over the past few days is ready to take a breather. In other words, USD is likely to trade sideways for today, expected to be within a range of 6.5500/6.6000.”
Next 1-3 weeks: “We highlighted yesterday (25 Apr, spot at 6.5330) that upward momentum remains strong and USD could advance further. We indicated that resistance levels are at 6.5600 and 6.5880. USD subsequent blew past both levels as it surged to 6.6090 before pulling back. Further USD strength is not ruled out but overbought shorter-term conditions could lead to 1 to 2 days of consolidation first. Looking ahead, the next resistance above 6.6090 is at 6.6300. On the downside, a breach of 6.4900 (‘strong support’ level was at 6.4750 yesterday) would indicate that the strong phase in USD that started late last week (see annotations in the chart below) has run its course.”