FX Strategists at UOB Group now see USD/CNH attempting a move to the 6.8600 region in the near-term.
24-hour view: “While our view for USD to move higher was correct, our expectation that ‘any advance was likely limited to a test of 6.8100’ was not. USD surged past 6.8100 and hit a high of 6.8285 before closing on a strong note at 6.8260 (+0.60%), its biggest 1-day gain in 2 months. While overbought, the advance has room to break above the major 6.8300 resistance. That said, the next resistance at 6.8430 is likely out of reach. Support is at 6.8100 followed by 6.8000.”
Next 1-3 weeks: “Two days ago (22 Sep, spot at 6.7900), we highlighted that the ‘month-long negative phase has run its course’. We held view that the ‘rebound in USD has room to extend higher but any advance is viewed as part of a broad 6.7500/6.8300 range’. While our view was not wrong, the pace by which USD approaches 6.8300 was faster than expected (USD rose to an overnight high of 6.8283 before closing higher by +0.60%, its biggest 1-day gain in 2 months). The price actions suggest that the rebound could extend further towards 6.8600. At this stage, the odds for a sustained rise above this level are not high. On the downside, 6.8000 is a strong support but only a break of 6.7800 would indicate the current upward pressure has eased.”