USD/CNH returns to the consolidative range – UOB

USD/CNH has now moved to a consolidative phase, likely within 6.4200 and 6.4680 in the next weeks, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to trade sideways yesterday. Our view was incorrect as USD surged to an overnight high of 6.4550.  The rapid rise appears to be overdone and USD is unlikely to strengthen much further even though there is room for it to test 6.4600. A sustained advance above this level is unlikely (next resistance is at 6.4680). Support is at 6.4450 followed by 6.4330.”

Next 1-3 weeks: “Yesterday (16 Sep, spot at 6.4300), we highlighted that ‘downward momentum is beginning to build but USD has to close below 6.4200 before a sustained decline can be expected’.  We added, ‘the odds for USD to close below 6.4200 are relatively high as long as USD does not move above 6.4540 within these couple of days’. We did not anticipate the strong surge during NY session that cracked 6.4540 (high of 6.4550). The build-up in downward momentum fizzled out quickly. The outlook is mixed now and USD could trade within a 6.4200/6.4680 range for a period of time.”