USD/CNH now looks to 6.5150 – UOB

USD/CNH faces a potential pullback to the 6.5150 level in the next weeks, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “While our view for USD to weaken yesterday was not wrong, we did not anticipate the sharp drop to 6.5406 (we held the view that any decline is likely limited to a test of 6.5500). While oversold, the weakness in USD has room to extend to 6.5300. For today, the next support at 6.5150 is not expected to come into the picture. Resistance is at 6.5480 followed by 6.5560.”

Next 1-3 weeks: “We noted yesterday that ‘the rapid loss in momentum has diminished the prospect for further USD strength to 6.6100’. We added, ‘unless USD can move and stay above 6.5750 within these 1 to 2 days, a break of 6.5440 would not be surprising and would indicate that the positive phase in USD that started in late March has run its course’. USD subsequently cracked 6.5440 as it dropped to 6.5406. The current movement is viewed as the early stages of a corrective pullback. Barring a move above the ‘strong resistance’ level of 6.5700, the pullback could extend to 6.5150.”