USD/CNH faces strong hurdle at 7.04 – UOB

FXStreet reports that in opinion of FX Strategists at UOB Group, USD/CNH is expected to meet a tough resistance in the 7.04 area.

24-hour view: “Our expectation for USD to move higher yesterday was incorrect as it traded in a relatively quiet manner between 6.9930 and 7.0175 before closing little changed at 7.0130 (-0.05%). Momentum indicators are turning neutral and for today, USD is likely to consolidate and trade between 6.9900 and 7.0160.”

Next 1-3 weeks: “We have expected USD to weaken since early this month (see annotations in the chart below) and in our latest update yesterday (22 Jul, spot at 6.9720), we indicated that ‘the odds for a move to 6.9500 have increased’. USD subsequently eked out a fresh low of 6.9645 before staging a dramatic reversal that sent it to a high of 7.0174. The break of our ‘strong resistance’ level at 6.9920 indicates that USD is no more under pressure. The current USD strength is viewed as part of a corrective rebound but at this stage, any advance is expected to face solid resistance at 7.0400. On the downside, the ‘strong support’ level is at 6.9750.”