USD/CNH needs to keep the trade above 6.6450 to maintain the constructive outlook unchanged for the time being, commented FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
Key Quotes
24-hour view: “We expected USD to ‘drift lower’ yesterday but we were of the view that ‘any weakness is not expected to break the strong support at 6.6200’. However, USD cracked 6.6200 and plummeted to 6.6111 before rebounding. The rapid drop appears to be running ahead of itself and USD is unlikely to weaken much further. For today, USD is more likely to trade between 6.6100 and 6.6450.”
Next 1-3 weeks: “We highlighted yesterday (04 May, spot at 6.6400) that while upward momentum has been dented, it is premature to expect the bullish phase to come an end. We added, ‘only a breach of 6.6000 would indicate that a short-term top is in place’ and USD ‘may trade below 6.6979 for a few days first’. USD subsequently dropped to 6.6111 during NY session before rebounding. There is no change in our view even though upward momentum has deteriorated further. From here, USD has to move and stay above 6.6450 within these 1 to 2 days or the risk of a break of 6.6000 would increase quickly.”
