USD/CNH now looks to 6.3975 – UOB

UOB Group’s FX Strategists now see the upside momentum lifting USD/CNH to the 6.3975 level in the next weeks.

Key Quotes

24-hour view: “While we detected the ‘build-up in momentum’ yesterday and expected USD to advance, we were of the view that ‘the resistance at 6.3555 may not be easy to break’. However, USD has no problem cracking 6.3555 as it rocketed to 6.3755 before easing. The advance is deeply overbought but there is room for USD to test 6.3800 before easing. The next resistance at 6.3975 is unlikely to come into the picture for now. Support is at 6.3600 followed by 6.3530.”

Next 1-3 weeks: “Yesterday (27 Jan, spot at 6.3425), we indicated that the recent weak phase in USD has ended. We noted shorter-term upward momentum is beginning to build but USD has to clear 6.3555 before a sustained advance is likely. We did not anticipate the rapid upward acceleration as USD lifted off and closed sharply higher (+0.47%). Strong boost in momentum is likely to lead to further USD strength. Next resistance level of note is at 6.3975. The upside risk is intact as long as USD does not move below 6.3490 (‘strong support’ level was at 6.3270 yesterday).”