In opinion of FX Strategists at UOB Group, USD/CNH could have charted an interim top following the recent price action.
24-hour view: “We held the view yesterday that “there is scope for USD to test 6.4950 before the risk of a deeper pullback would increase”. Our expectation did not materialize as USD eased off from 6.4850 (low has been 6.4665). The underlying tone has weakened somewhat and USD could edge lower but any decline is unlikely to challenge the strong support at 6.4550 (minor support is at 6.4650). Resistance is at 6.4760 followed by 6.4830.”
Next 1-3 weeks: “After USD rose to 6.4946, we noted yesterday (24 Jun, spot at 6.4820) that “upward momentum has improved, albeit not by much”. We highlighted that “further USD strength appears likely but 6.5000 is another major level and is expected to offer solid resistance”. USD subsequently eased off and closed slightly lower at 6.4699 (-0.13%). Upward momentum is beginning to slow and this coupled with overbought conditions has increased the risk of a short-term top. However, only a break of 6.4500 (no change in ‘strong support” level) would indicate that the USD strength that started more than a week ago has run its course.”
