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Further consolidation in USD/CNH is expected in the near-term ahead of a potential resumption to the 6.5500 area in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to move higher last Friday but we were of the view that ‘last month’s peak at 6.5080 is unlikely to come into the picture’. However, USD blew past 6.5080 and surged to 6.5285 before easing off. The strong surge is overdone and further sustained USD strength is unlikely. USD is more likely to consolidate and trade within a 6.4900/6.5220 range.”

Next 1-3 weeks: “We have held a positive view in USD for more two weeks now. After USD retreated from 6.5080 and traded mostly sideways for several days, we highlighted in our latest narrative from last Friday (05 Mar, spot 6.4875) that ‘the overall outlook is still deemed as positive as long as USD does not move below 6.4400’. USD finally cracked 6.5080 as it surged to 6.5285 during NY hours. While overbought shorter-term conditions could lead to consolidation first, the current USD strength could extend to 6.5500 later on. The positive outlook is deemed intact as long as USD does not move below 6.4680 (‘strong support’ level previously at 6.4400).”