UOB Group’s FX Strategists noted USD/CNH is now likely to navigate with the 6.4400-6.5200 range in the next weeks.
24-hour view: “We highlighted yesterday that ‘while further USD strength would not be surprising, the strong surge appears to be running ahead of itself and a sustained rise above 6.5200 is unlikely’. USD subsequently rose to 6.5150 before staging a surprisingly sharp and swift sell-off to an overnight low of 6.4689. The rapid swings have resulted in a mixed outlook and USD could trade in a choppy manner. Expected range for today, 6.4600/6.4950.”
Next 1-3 weeks: “We highlighted yesterday that ‘6.5200 appears to be within reach and a break of this level would suggest further USD strength towards 6.5360’. USD subsequently rose to 6.5150 but the sharp sell-off from the high came as a surprise. While our ‘strong support” at 6.4650 is still intact (overnight low of 6.4689), upward momentum has waned considerably. In other words, further USD strength is unlikely. From here, USD is more likely to trade sideways, expected to be within a relatively broad range of 6.4400/6.5200.”