United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that USD/CNH spiked to 6.7980 before reversing, leaving the pair broadly unchanged near 6.78. They see room for the pullback to extend within a 6.7740–6.7900 band in the near term, but over one to three weeks still expect another test of 6.8000 as long as support at 6.7600 holds, despite subdued momentum.

Yuan pair holds firm near resistance

"24-HOUR VIEW: The following are excerpts from our update last Friday: “The slight increase in upward momentum suggests USD could edge higher today. Based on the prevailing momentum, a break above the major resistance at 6.7880 is unlikely. Support is at 6.7710; a breach of 6.7660 would indicate that the current mild upward pressure has eased.” Our view of a higher USD was not wrong, but we did not expect USD to rise sharply to 6.7980. USD pulled back sharply from the high and closed largely unchanged at 6.7807 (+0.04%). The pullback has scope to extend, but any decline is likely part of a lower range of 6.7740/6.7900 rather than a continued decline."

"1-3 WEEKS VIEW: Last Thursday (18 Jun, spot at 6.7720), we highlighted that “upward momentum has not increased significantly,” but we pointed out that “there is scope for USD to test 6.7880.” On Friday, USD broke above 6.7880, rising to a high of 6.7980 before pulling back. We still do not detect a clear increase in upward momentum, but from here, USD could test 6.8000. We will maintain this view as long as 6.7600 (‘strong support’ level was at 6.7560 last Friday) is not breached."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)