Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group note USD/CNH keeps targeting the 6.9000/6.9300 region in the next weeks.

Key Quotes

24-hour view: “We expected ‘further USD gains’ last Friday but we held the view that ‘the major resistance at 6.9000 is likely out of reach today’. Our view was correct as USD rose to 6.8966 before staging a sharp and swift pullback (low has been 6.8682). The price movements are likely part of a consolidation and we expect USD to trade sideways between 6.8650 and 6.8880 today.”

Next 1-3 weeks: “Last Friday (17 Feb, spot at 6.8780), we indicated that ‘the outlook for USD remains positive and the focus is at 6.9000’. USD subsequently rose to 6.8966 before pulling back. There is no change in our view but overbought short-term conditions could lead to 1-2 days of consolidation. Overall, only a break of 6.8480 (‘strong support’ level was at 6.8360 last Friday) would indicate that the USD strength that started earlier this month has come to an end.”