USD/CNH: Extra gains expected above 6.4950 – UOB

USD/CNH could see a sustained upside once 6.4950 is cleared, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘despite the quiet price actions, we continue to see chance for USD to edge higher but a sustained rise above 6.4780 appears unlikely’. While USD subsequently edged higher, it did not break 6.4780 (high of 6.4750). Upward momentum is beginning to improve and the bias for today is on the upside. A break of 6.4780 would not be surprising but the next resistance at 6.4900 is unlikely to come into the picture. Support is at 6.4680 followed by 6.4630.”

Next 1-3 weeks: “We have held the same view since Monday (28 Jun, spot at 6.4605) where USD is expected to trade sideways, likely within a 6.4300/6.4900 range. There is no change in our view but shorter-term upward momentum is beginning to improve. While upside risk appears to be building, USD has to break 6.4950 before a sustained advance can be expected. The prospect of USD to break 6.4950 is not high for now but it would remain intact as long as USD does not move below the ‘strong support’ level at 6.4590 within these few days.”