UOB Group’s FX Strategists noted that the consolidative theme is expected to persist around USD/CNH for the time being.
24-hour view: “Yesterday, we held the view that the ‘bias for USD is on the downside towards 6.4340’. USD subsequently dipped to 6.4348 before making a sharp reversal and surged to 6.4599 before extending its gains during early Asian hours. The rapid build-up in momentum suggests that USD could strengthen further to 6.4710. The major resistance at 6.4800 is unlikely to come into the picture. On the downside, a break of 6.4500 (minor support is at 6.4550) would indicate that the current upward pressure has eased.”
Next 1-3 weeks: “There is no change in our view from last Wednesday (06 Oct, spot at 6.4500). As highlighted, USD is likely to trade between 6.4240 and 6.4800 for a period of time. Looking ahead, the odds for a break of 6.4800 first are higher but USD has to close above 6.4880 before a sustained advance can be expected.”