USD/CNH now shifted the focus to 6.5970 – UOB

UOB Group’s FX Strategists now see USD/CNH pointing to a test of 6.5970 in the next weeks.

Key Quotes

24-hour view: “The strong surge in USD yesterday came as a surprise (high of 6.5534 during NY hours). USD extended its gains after opening and while overbought, USD could advance further to 6.5650. The next resistance at 6.5970 is unlikely to come into the picture. Support is at 6.5380 followed by 6.5270.”

Next 1-3 weeks: “We have held a positive view in USD for about 3 weeks now. In our latest narrative from yesterday (08 Mar, spot at 6.5060), we highlighted that ‘while overbought shorter-term conditions could lead to consolidation first, the current USD strength could extend to 6.5500 later on’. In other words, while our view for a higher USD is correct, we underestimated the pace of the advance as USD surged above 6.5500 during NY hours. From here, the focus has shifted to 6.5970. Overall, the positive outlook is deemed intact as long as USD does not move below 6.5000 (‘strong support’ level was at 6.4680 yesterday).”