The continuation of the uptrend could see USD/CNH retest the 6.9400 region ahead of 6.9600 in the short-term horizon, according to FX Strategists at UOB Group Quek Ser Leang and Peter Chia.
24-hour view: “USD soared and closed at 6.8923 last Friday (+0.60%). USD continues with its advance during early Asian hour and took out the major resistance at 6.9000. The rapid rise appears to be a tad overdone and the next major resistance at 6.9400 is unlikely to come under threat for now. Support is at 6.9000 followed by 6.8870.”
Next 1-3 weeks: “We have held a positive USD view for about 2 weeks. As USD struggled to extend its advance, we highlighted last Wednesday (24 Aug, spot at 6.8630) that the rapid loss in shorter-term upward momentum has diminished the odds for USD to advance further to 6.9000. We pointed out that, ‘only a break of 6.8330 would indicate that USD strength has run its course’. USD did not break 6.8330 and today, it surged past 6.9000. The rapid boost in momentum indicates that the USD strength could extend to 6.9400, possibly 6.9600. On the downside, a break of 6.8600 (‘strong support’ level was at 6.8330 last Friday) would indicate that USD is unlikely to strengthen further.”