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UOB Group’s FX Strategists noted USD/CNH keeps the constructive stance unchanged in the short-term.

Key Quotes

24-hour view: “Last Friday, we expected USD to strengthen but we were of the view ‘any advance is likely limited to a test of 6.4820’. However, USD traded in a quiet manner between 6.4526 and 6.4766 before closing at 6.4651. That said, the underlying tone still appears firm as USD rose after opening this morning. From here, further USD strength is likely even though any advance is expected to face strong resistance at 6.4950. The major resistance at 6.5200 is not expected to come into the picture. Support is at 6.4640 followed by 6.4550.”

Next 1-3 weeks: “While we have held a negative in USD since early last week, we cautioned last Friday (08 Jan, spot at 6.4680) that USD ‘has to move and stay below 6.4450 within these 1 to 2 days or a break of 6.4950 would indicate the current weakness has run its course’. While 6.4950 is still intact, the strong price actions this morning suggests that the weak phase in USD has ended. From here, the near-term bias is tilted to the upside but for now, the odds for a rise above 6.5200 are not high. Overall, the current upward bias is deemed is intact as long as USD does not move below 6.4450.”