USD/CNH: Further retracement likely near term – UOB

The resumption of the selling pressure could force USD/CNH to recede to the 6.7000 region and probable 6.6700 in the next weeks, commented FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We did not expect the strong rise in USD to a high of 6.7856 yesterday (we were expecting sideway-trading). The rapid rise appears to be running ahead of itself and USD is unlikely to advance much further. For today, USD is likely to consolidate and trade between 6.7550 and 6.7950.”

Next 1-3 weeks: “Yesterday (18 May, spot at 6.7470), we highlighted that the month-long USD strength has run its course. We were of the view that USD is in the early stages of a pullback and we indicated that support is at 6.7000 followed by 6.6700. We did not quite expect the subsequent sharp bounce to 6.7856. While the bounce has dented the downward momentum, there is no change in our view for now. Only a breach of 6.7950 (no change in ‘strong resistance’ level) that USD is likely to consolidate and trade sideways instead of staging a pullback.”