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UOB Group’s FX Strategists see further upside likely in USD/CNH in the near-term.

Key Quotes

24-hour view: “We expected USD to strengthen yesterday but we were of the view that ‘any advance is expected to face strong resistance at 6.4950’. USD subsequently rose to 6.4900 before easing off. Upward momentum has more or less dissipated and for today, USD is likely to trade sideways, expected to be within a 6.4540/6.4880 range.”

Next 1-3 weeks: “While we have held a negative view in USD since early last week, we cautioned last Friday (08 Jan, spot at 6.4680) that USD ‘has to move and stay below 6.4450 within these 1 to 2 days or a break of 6.4950 would indicate the current weakness has run its course’. While 6.4950 is still intact, the strong price actions this morning suggests that the weak phase in USD has ended. From here, the near-term bias is tilted to the upside but for now, the odds for a rise above 6.5200 are not high. Overall, the current upward bias is deemed is intact as long as USD does not move below 6.4450.”