USD/CNH: Further upside remains in the pipeline – UOB

Further upside in USD/CNH continues to target 6.9400 ahead of 6.9600, comment FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘appears to have moved into a consolidation’ and we expected USD to ‘trade sideways between 6.9000 and 6.9300’. Our view was not wrong even though USD traded within a narrower range than expected (6.9045/6.9285). The price actions still appear to be part of a consolidation and we continue to expect USD to trade between 6.9000 and 6.9300.”

Next 1-3 weeks: “On Monday (29 Aug, spot at 6.9140), we highlighted that the rapid boost in momentum indicates that the USD strength could extend to 6.9400, possibly 6.9600. USD subsequently soared to 6.9325. There is no change in our view for now but USD could consolidate for a couple of days first. Overall, only a break of 6.8700 (no change in ‘strong support’ level from yesterday) would indicate that the USD strength that started two weeks ago has run its course.”