USD/CNH: Further gains likely above 7.0000 – UOB

USD/CNH faces extra gains once 7.0000 is cleared, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is scope for USD to edge above 6.9600 but it is unlikely to be able to maintain a foothold above this level’. The anticipated advance exceeded our expectations as USD surged to a high of 6.9960. While overbought, the advance could edge above the major resistance at 7.0000. However, it remains to be seen if USD can remain above this level. The next resistance at 7.0200 is unlikely to come into view today. Support is at 6.9650, a breach of 6.9450 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Yesterday (07 Mar, spot at 6.9500), we noted, ‘upward momentum appears to be building’. We added, USD ‘is likely to trade with an upward bias but any advance is likely to encounter solid resistance at 7.0000’. While our view was not wrong, we did not quite expect the strong advance as USD soared to a high of 6.9960. The USD outlook is still positive but it has to break and stay above 7.0000 before further advance to 7.0200 is unlikely. The upside risk is intact as long as USD stays above 6.9140 (‘strong support’ level was at 6.9000 yesterday).”