USD/CNH now faces resistance at 6.5180 – UOB

According to FX Strategists at UOB Group, the upside momentum in USD/CNH now faces the next hurdle at 6.1580 ahead of 6.5300.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the underlying tone has firmed and the bias is tilted to the upside’. We were of the view that ‘any advance is unlikely to break the major resistance at 6.5000’. However, USD took out 6.5000 and soared to 6.5040 before closing on a firm note at 6.5009 (+0.26%). Upward momentum is showing signs of slowing and this coupled with overbought conditions suggest that while USD could rise further, the major resistance at 6.5180 is unlikely to come into the picture. Support is at 6.4930 followed by 6.4860.”

Next 1-3 weeks: “We have held the same view since early last week that USD ‘has to close above 6.5000 before a sustained advance can be expected’. Two days ago (18 Aug, spot at 6.4885), we highlighted that upward momentum has improved slightly and the ‘chance for USD to close above 6.5000 has increased’. USD rose to 6.5040 yesterday before closing at 6.5009 (+0.26%). While we would have preferred a stronger daily closing, the price actions suggest that USD is ready to head higher from here. Resistance is at 6.5180 followed by 6.5300. On the downside, a break of 6.4800 (‘strong support’ level previously at 6.4650) would indicate that USD is not ready to head higher just yet.”