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UOB Group’s FX Strategists now see USD/CNH edging higher to the 6.5630 level in the short-term.

Key Quotes

24-hour view: “While we expected USD to strengthen yesterday, we were of the view that ‘a sustained advance above 6.5360 appears unlikely’. However, USD cracked 6.5360 and soared to 6.5531 before easing off. The rapid rise appears to be overdone and further sustained rise in USD is unlikely. USD is more likely to consolidate and trade between 6.5330 and 6.5530.”

Next 1-3 weeks: “We noted yesterday that ‘upward momentum is beginning to improve’ and we highlighted that USD ‘had to close above 6.5360 before a move to 6.5630 can be expected’. USD subsequently rose to 6.5531 before easing off to close at 6.5489. While overbought shorter-term conditions could lead to consolidation first, USD is expected to move to 6.5630 later on. Looking ahead, the next resistance above 6.5630 is at 6.5900. Overall, USD is expected to trade with a positive bias as long as it does not move below 6.5150 (‘strong support’ level was at 6.5080 yesterday).”