The mixed outlook could prompt USD/CNH to remain side-lined in the 6.3400-6.3900 range for the time being, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “Our view from yesterday that ‘risk for USD is on the downside’ was incorrect as it rose to 6.3750 before closing at 6.3743 (+0.14%). While upward momentum has not improved by much, there is scope for USD to edge higher to 6.3800. A sustained rise above this level appears unlikely. On the downside, a breach of 6.3630 (minor support is at 6.3680) would indicate that the current upward pressure has eased.”
Next 1-3 weeks: “We highlighted yesterday (03 Jan, spot at 6.3550) that downward momentum is beginning to build and we were of the view that USD could test 6.3310. Our view was invalidated quickly as USD soared to our ‘strong resistance’ level at 6.3750. While the ‘strong resistance’ is not clearly breached, the build-up in momentum has fizzled out. From here, the outlook is mixed, and USD could trade between 6.3400 and 6.3900 for now.”
