According to FX Strategists at UOB Group, USD/CNH’s upside momentum could extend to the 6.5000 area in the next weeks.

Key Quotes

24-hour view: “Our expectation for USD to ‘trade within a 6.4440/6.4660 range’ was wrong as it soared to 6.4799 before easing off. Despite the strong advance, upward momentum has not improved by all that much. That said, USD could edge above 6.4800 but the major resistance at 6.4930 is not expected to come under threat. On the downside, a breach of 6.4580 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “We have expected a stronger USD since early last week. In our latest narrative from last Friday (18 Jun, spot at 6.4530), we indicated upward momentum is stronger than expected and the ‘next level to focus on above 6.4660 is at 6.4800’. Our view was not wrong as USD soared to within one pip of 6.4800 yesterday (high of 6.4799). The next resistance above 6.4800 is at 6.4930 but in view of the overbought conditions, this level may not come into the picture so soon. The upside risk is deemed intact as long as USD does not move below 6.4400 (‘strong support’ level was at 6.4270 yesterday).”