The upside momentum in USD/CNH is expected to meet a tough hurdle at the 6.5000 level, in opinion of FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday that USD ‘is unlikely to strengthen much further’ and we expected USD to ‘trade between 6.4680 and 6.4900’. However, USD rose to 6.4946 before pulling back to close largely unchanged at 6.4780 (-0.05%). Despite rising to 6.4946, upward momentum has not improved by much and the chance for a sustained advance in USD today is not high. For today, there is scope for USD to test 6.4950 before the risk of a deeper pullback would increase. The next resistance at 6.5000 is unlikely to come into the picture. On the downside, a break of 6.4700 (minor support is at 6.4740) would indicate that the current upward pressure has eased.”
Next 1-3 weeks: “We have expected a stronger USD since early last week. Yesterday (23 Jun, spot at 6.4770), we highlighted that USD ‘could move above 6.4930 but may not be able to maintain a foothold above this major level’. USD subsequently rose to 6.4946 before pulling back. Upward momentum has improved, albeit not by all that much. Further USD strength appears likely but 6.5000 is another major level and is expected to offer solid resistance. On the downside, a breach of 6.4550 (‘strong support’ level was 6.4500 yesterday) would indicate that the current USD strength has run its course.”