United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann reports that USD/CNH has bounced sharply to 6.7153, with intraday gains likely capped near 6.7200. The bank’s earlier negative stance has softened as downward momentum fades, and over the next one to three weeks, it now expects the pair to edge higher within a 6.7040–6.7290 range.

From downside bias to gentle rebound

“24-HOUR VIEW: We indicated yesterday that USD “could trade between 6.7030 and 6.7100.” USD then dipped to 6.7043 before rising sharply to 6.7153. While the sharp rise has scope to extend, any advance is expected to face strong resistance at 6.7200. Support is at 6.7085.”

“1-3 WEEKS VIEW: We have been holding a negative USD stance since the start of the month. In our most recent narrative from Monday (07 Sep, spot at 6.7070), we noted that “downward momentum has increased further, and if USD breaks and holds below 6.7000, it could decline further to 6.6900.” Yesterday, USD rose sharply to 6.7153. Although our ‘strong resistance’ level at 6.7160 has not been breached yet, downward momentum has largely faded. The increasing upward momentum suggests USD could edge higher, but currently, any advance should stay within a 6.7040/6.7290 range.”