Extra gains could motivate USD/CNH to challenge the 6.8500 area in the next weeks, commented FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Our expectations for USD ‘to trade between 6.7300 and 6.7800’ yesterday were incorrect as it lifted off and rocketed to a high of 6.8310 before pulling back. The outsized advance appears to be overdone and USD is unlikely to strengthen much further. For today, USD is more likely to consolidate and trade within a range of 6.7900/6.8350.”

Next 1-3 weeks: “We have held a strong USD view for about a month now. In our latest narrative from Wednesday (11 May, spot at 6.7500), we highlighted that upward momentum has waned somewhat but until there is a clear breach of 6.7100, we still see chance for one more push higher in USD to 6.8000. Yesterday (12 May), USD lifted and blew past 6.8000 to reach a high of 6.8310. The boost in momentum is likely to lead to further USD strength towards 6.8500. On the downside, a breach of 6.7650 (‘strong support’ level previously at 6.7100) would indicate that the current USD rally is ready to take a breather.”