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The upside momentum in USD/CNH could now extend to the 6.4660 level ahead of a potential test of 6.4800, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for USD to ‘trade within a range’ was wrong as it soared to 6.4653 before pulling back. The rapid rise appears to be overdone and while there is room for USD to move above the major resistance at 6.4660, it is unlikely able to maintain a foothold above this level (next resistance is at 6.4800). Support is at 6.4430 followed by 6.4380.”

Next 1-3 weeks: “Yesterday (17 Jun, spot at 6.4330), we highlighted that ‘risk is still for a higher USD but it is left to be seen if it could break the major longterm resistance at 6.4500’. We added, ‘that said, a break of this major resistance could potentially lead to a rapid rise towards 6.4660’. USD subsequently cracked 6.4500 and soared close to 6.4660 (high of 6.4653 in NY). Upward momentum is stronger than we anticipated and the next level to focus on above 6.4660 is at 6.4800. The upside risk is deemed intact as long as USD does not move below 6.4270 (‘strong support’ level was at 6.4000 yesterday).”