Chinese Yuan: Downside bias as momentum improves against US Dollar – UOB
United Overseas Bank’s (UOB) Senior Technical Strategist Quek Ser Leang notes that USD/CNH has broken higher, with momentum improving after Monday’s move to 6.8051 and a close at 6.8038. The bank now sees scope for a test of resistance at 6.8080 and potentially last month’s high at 6.8195, provided the pair holds above nearby support levels.
Upside risk building above 6.8080
"24-HOUR VIEW: USD rose to a high of 6.7998 on Monday. When USD was at 6.7945 yesterday, we highlighted the following: “Despite the advance, upward momentum has not increased much. However, USD could potentially rise above 6.8000. The major resistance at 6.8080 is unlikely to come under threat. Support is at 6.7900, followed by 6.7850.” We were not wrong, as after dipping briefly to a low of 6.7894, USD rose to a high of 6.8051. USD closed 0.14% higher at 6.8038. The advance has gathered momentum, and today, USD could break above the 6.8080 resistance. However, any further advance is unlikely to reach last month’s high of 6.8195. To sustain the momentum, USD must hold above 6.7960 (minor support is at 6.8000)."
"1-3 WEEKS VIEW: We have held the same view since last Wednesday (01 Jul, spot at 6.7920), when we highlighted that USD “is likely to trade in a range between 6.7750 and 6.8080.” Yesterday, USD rose to a high of 6.8051. Upward momentum is starting to build, and if USD closes above 6.8080, it is likely to head higher toward last month’s high of 6.8195. The upside risk will remain intact as long as USD holds above 6.7830 (‘strong support’ level)."
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