USD/CNH: Still scope for a move to 7.1000 – UOB

USD/CNH could prolong the upside bias and test 7.1000 once it leaves behind 7.0500, comment FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we expected USD to ‘trade within a range of 6.9800/7.0220’. However, USD edged to a high of 7.0325. Despite the advance, upward momentum has not improved by much. That said, USD could continue to edge higher but it is unlikely to challenge the major resistance at 7.0500. Last week’s high near 7.0430 is already a strong resistance level. Support is at 7.0220 but only a breach of 7.0150 would indicate the current mild upward pressure has eased.”

Next 1-3 weeks: “Our update from Monday (19 Sep, spot at 6.9980) still stands. As indicated, while the sharp pullback from the high of 7.0427 has dented the upward momentum somewhat, there is still chance for USD to advance to 7.0500. Only a break of 6.9750 (‘strong support’ level was at 6.9660 yesterday) would indicate that the USD strength that started one week ago has run its course. Looking ahead, if 7.0500 is broken, the focus will shift to 7.1000.”