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UOB Group’s FX Strategists noted the outlook for USD/CNH is seen on the positive side while above the 6.4400 level in the short-term.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the underlying tone has improved, and this could lead to USD edging higher to 6.4900’. We added, ‘sustained advance above this level is unlikely’. Our view was not wrong as USD rose to 6.4920. The rapid rise appears to be running ahead of itself but there is scope for the advance in USD to test 6.5000 first before easing. Last month’s peak at 6.5080 is unlikely to come into the picture. Support is at 6.4780 followed by 6.4700.”

Next 1-3 weeks: “We have held a positive view in USD for two weeks now. After USD retreated from 6.5080 and traded mostly sideways, in our latest narrative from Wednesday (03 Mar, spot 6.4725), we indicated that USD ‘has to move and stay above 6.4900 within these few days or prospect for further USD strength would diminish quickly’. USD rose to 6.4920 yesterday (04 Mar) but upward momentum has not improved by all that much. That said, the overall outlook is still deemed as positive as long as USD does not move below 6.4400 (no change in ‘strong support’ level for now). Looking ahead, the next resistance above February’s peak of 6.5080 is at 6.5150.”