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In opinion of FX Strategists at UOB Group, the prospects of USD/CNH to slip back to the 6.5200 level appear to be losing traction.

Key Quotes

24-hour view: “We highlighted yesterday that the ‘rebound in USD has room to extend higher but any advance is unlikely to challenge the resistance at 6.5900’. USD moved higher as expected but it managed to edge above 6.5900 (high of 6.5909) before easing off. Upward momentum has waned and USD is unlikely to strengthen much further. USD is more likely to consolidate and trade between 6.5500 and 6.5900 for today.”

Next 1-3 weeks: “We have held a negative view in USD for about 2 weeks now. In our latest narrative from Wednesday (18 Nov, spot at 6.5560), we indicated that USD ‘is likely to weaken to further to 6.5200’. USD subsequently dropped to 6.5319 before staging a relatively robust recovery. Downward momentum has waned and unless USD can move and stay below 6.5500 within these 1 to 2 days, the prospect for a move to 6.5200 would diminish quickly. Conversely, a break of 6.6000 (no change in ‘strong resistance’ level) would indicate that the weak phase in USD has run its course.”

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