USD/CNH: Further upside not ruled out – UOB

FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang note USD/CNH could edge further up in the short term.

Key Quotes

24-hour view: “We did not expect the sudden lift-off in USD that sent it rocketing by +1.16% (NY close of 6.8135), its largest 1-day advance since Mar 2020. The outsized advance appears to be overdone and USD is unlikely to strengthen much further. For today, USD is more likely to consolidate and trade between 6.7850 and 6.8250.”

Next 1-3 weeks: “We noted yesterday (15 Aug, spot at 6.7400) that downward momentum has waned and the chance for USD to weaken has diminished. We did not expect sudden surge that sent USD soaring to a high of 6.8200. While the rapid rise appears to be running ahead of itself, there is room for USD to move above to the year-to-date high near 6.8400. However, it is left to be seen if USD can maintain a foothold above this major resistance level. In order to maintain the strong build-up in momentum, USD should hold above 6.7700 within these few days.”