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FX Strategists noted USD/CNH is expected to test 6.3300 while below the 6.4000 level in the near-term.

Key Quotes

24-hour view: “We highlighted yesterday that ‘downward pressure has eased and while there is room for the recovery to extend, any advance is likely limited to a test of 6.3800’. The subsequent recovery exceeded our expectation as USD rose to 6.3854. Despite the advance, upward momentum has barely improved and USD is unlikely to strengthen much further. For today, USD is more likely to trade sideways between 6.3680 and 6.3880.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (01 Jun, spot at 6.3670). As highlighted, ‘while the focus is at 6.3300 now, oversold conditions suggest that this level may not come into the picture so soon’. All in, only a breach of the 6.4000 (no change in ‘strong resistance’ level) would indicate that the weakness in USD that started earlier last week has run its course.”