USD/CNH: Prospects for extra gains remain in place – UOB

24-hour view: We highlighted yesterday that “The risk for USD still appears to be on the upside even though lackluster momentum continues to suggest 7.1800 is unlikely to come into view”. Our view was not wrong as while USD strengthened, it did not break 7.1800 (high has been 7.1784). Upward momentum has increased and today, a break of 7.1800 will not be surprising. However, the next major resistance at 7.2000 could be out of reach. Support is at 7.1630, followed by 7.1500.

Next 1-3 weeks: We have expected a higher USD since last Thursday (08 Jun) when it was trading at 7.1500. In our most recent narrative from two days ago (12 Jun, spot at 7.1520), we highlighted that “while upward momentum has been rejuvenated, it remains to be seen if USD has enough momentum to rise to 7.1800 and 7.2000”. Yesterday (13 Jun), USD soared to a high of 7.1784. In view of the further increase in momentum, the chance of USD breaking above 7.2000 has improved. Looking ahead, the next level to watch above 7.2000 is 7.2200. On the downside, a break of 7.1330 (‘strong support’ level previously at 7.1220) would indicate that USD is not strengthening further.