USD/CNH faces a potential near-term consolidation ahead of a probable advance to 6.7700, commented FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We noted yesterday ‘upward momentum has improved rapidly’. We expected USD to strengthen but we were of the view that ‘the major resistance at 6.7500 is likely out of reach’. The subsequent advance exceeded our expectations as USD soared to a high of 6.7530 before pulling back. The pullback amidst overbought conditions suggest USD is unlikely to advance further. For today, USD is more likely to trade between 6.7260 and 6.7500.”

Next 1-3 weeks: “We turned positive USD yesterday (12 Jul, spot at 6.7255) and we were of the view that it could strengthen to 6.7500. We did not expect the rapid rise as USD soared to 6.7530. While overbought shorter-term conditions could lead to 1 to 2 days of consolidation first, USD could advance further to 6.7700 later on. Only a break of 6.7050 (‘strong support’ level was at 6.6950 yesterday) would indicate that USD is not ready to head higher.”