USD/CNH: Scope for a test of 6.8000 – UOB

USD/CNH could now attempt a visit to the 6.8000 level in the next weeks, commented FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further USD strength is likely’ and ‘a break of 6.7400 could lead to an advance to 6.7600’. The anticipated advance exceeded our expectations as USD soared to a high of 6.7760. Conditions are deeply overbought and USD is unlikely to strengthen much further. For today, USD is more likely to trade between 6.7350 and 6.7800.”

Next 1-3 weeks: “We have held a positive view in USD for more than 3 weeks. In our narrative from yesterday (09 May, spot at 6.7050), we indicated that strong upward momentum is likely to lead to an advance to 6.7400, as high as 6.7600. We added, ‘looking ahead, a clear break of 6.7600 would shift the focus to 6.8000’. USD subsequently soared to 6.7760. Solid upward momentum is likely to lead to further USD strength to 6.8000. On the downside, a breach of 6.7100 (‘strong support’ level was at 6.6700 yesterday) would indicate that the rally is ready to take breather.”