USD/CNH: Upside momentum could be losing traction – UOB
FX Strategists at UOB Group suggested the probability of extra gains in USD/CNH seems to be running out of steam for the time being.
24-hour view: “We expected USD to trade sideways yesterday and were of the view it is unlikely to move much out of Monday’s 6.9858/7.0230 range. USD subsequently traded between 6.9860 and 7.0230. The movement is still viewed as part of a consolidation phase and we continue to expect USD to trade sideways, likely between 6.9880 and 7.0230.”
Next 1-3 weeks: “While our view from last Tuesday (28 Jan, spot at 6.9780) wherein ‘USD could extend its gains to 7.0400’ still stands, upward momentum appears to slowing and this coupled with overbought conditions suggest 7.0400 could be just out of reach this time round. However, only a breach of 6.9680 (‘strong support’ previously at 6.9500) would indicate that strong advance that started in mid-Jan has run its course.”