USD/CNH: Upside bias looks improved – UOB

USD/CNH could head towards the 6.4100 level amidst the current upside momentum, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the underlying tone has softened somewhat but any weakness is expected to encounter strong support at 6.3730’. However, USD did not weaken as it traded sideways between 6.3772 and 6.3863 before closing largely unchanged (-0.04%). Momentum indicators are mostly ‘flat’ and USD is likely to continue to trade sideways. Expected range for today, 6.3750/6.3880.”

Next 1-3 weeks: “After USD rose to 6.3975, we highlighted last Friday (07 Jan, spot at 6.3900) that ‘upward momentum has improved slightly but it appears too early to expect a sustained advance’. We added, there is room for USD to edge higher to 6.4100 but a breach of 6.3730 (no change in ‘strong support’ level) would indicate that the build-up in momentum has fizzled out. There is no change in our view for now.”