USD/CNH: Near-term consolidation seems on the table – UOB

According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, USD/CNH could attempt some consolidation ahead of the probable resumption of the upside.

Key Quotes

24-hour view: “We expected USD to ‘trade between 6.7260 and 6.7500’ yesterday. During NY session, USD popped to a high of 6.7480, dropped sharply to 6.7100 before rebounding to close at 6.7253 (-0.19%). The outlook is mixed and further choppy movement is not ruled out, likely between 6.7130 and 6.7430.”

Next 1-3 weeks: “We turned positive USD on Tuesday (12 Jul, spot at 6.7255). Yesterday (13 Jul, spot at 6.7400), we highlighted that USD could consolidate for 1 to 2 days first before moving higher to 6.7700. USD subsequently traded in choppy manner between 6.7100 and 6.7480. While there is no change in our view, the odds for USD to advance to 6.7700 have diminished. From here, a break of 6.7050 (no change in ‘strong support’ level from yesterday) would indicate that USD is not ready to rise to 6.7700.”