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UOB Group’s FX Strategists still believe USD/CNH could advance and test the 6.5200 area in the next weeks.

Key Quotes

24-hour view: “While we expected USD to strengthen last Friday, we were of the view ‘any advance is expected to face solid resistance at 6.4880’. However, USD soared to 6.4990 before closing on a firm note at 6.4974 (+0.52%). The rapid rise is overbought but there is room for USD to push above 6.4990 before a more sustained pullback can be expected. For today, the prospect for a clear break of last week’s peak at 6.5075 is not high. Support is at 6.4840 followed by 6.4790.”

Next 1-3 weeks: “There is not much to add to our update from Wednesday (20 Jan, spot at 6.4800). As highlighted, while upward momentum has been dented, there is still chance for USD to move to 6.5200. Only a break of 6.4450 (no change in ‘strong support’ level) would indicate that USD is not ready to move to 6.5200.”