UOB Group’s FX Strategists suggested that USD/CNH could have now moved into a consolidation range between 6.4650 and 6.5020.
24-hour view: “Our view for USD to trade sideways was incorrect as it popped up to an overnight high of 6.4912 before pulling back quickly. The pullback could extend lower but sustained decline below 6.4740 is unlikely. Resistance is at 6.4880 followed 6.4920.”
Next 1-3 weeks: “We have held a negative view in USD since mid-April. In our latest narrative from Monday (03 May, spot at 6.4700), we highlighted that ‘downward momentum is beginning to wane and a break of 6.4900 would indicate that the negative phase has ended’. The ‘strong resistance’ level at 6.4900 was breached yesterday as USD popped to a high of 6.4912. While the negative phase is deemed to have ended, it is too soon to expect a recovery. From here, USD is expected to trade between 6.4650 and 6.5020 for period of time. Looking ahead, a clear break of 6.5020 would indicate that USD is ready for a sustained and sizeable rebound.”
