USD/CNH: Downside pressure now looks abated – UOB

FX Strategists at UOB Group noted USD/CNH is seen accelerating gains on a break above the 6.3555 level.

Key Quotes

24-hour view: “USD traded between 6.3237 and 6.3384 yesterday, narrower than our expected sideway-trading range of 6.3240/6.3430. USD rose above 6.3430 during early Asian hours and upward momentum is beginning to build. The build-up in momentum is likely to lead to an advance above 6.3500. The next resistance at 6.3555 may not be easy to break. On the downside, 6.3330 is a solid support (minor support is at 6.3360.”

Next 1-3 weeks: “We turned negative in USD two weeks ago. As USD declined, in our latest narrative from two days ago (25 Jan, spot at 6.3300), we highlighted that downward momentum has not improved by much but USD could weaken further to 6.3180. We added, a breach of 6.3500 would indicate that the weak phase in USD has come to an end. While 6.3500 is still intact, USD traded on a firm note during early Asian hours and downward momentum has dissipated. Shorter-term upward momentum is beginning to build but USD has to clear 6.3555 before a sustained advance is likely. The chance for USD to clear 6.3555 is quite high and it would increase further as long as USD does not below 6.3270 within these few days. Looking ahead, the next resistance above 6.3555 is at 6.3700.”