USD/CNH: Another visit to 7.0000 starts shaping up – UOB

According to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, USD/CNH could extend the upside to the 7.0000 region in the near term.

Key Quotes

24-hour view: “After trading sideways to slightly lower for a few days, USD surged to a high of 6.9630 before closing at 6.9628 (+6.9370). While overbought, USD could rise even though it remains to be seen if it can break and stay above 6.9650. The major resistance at 7.0000 is not expected to come under threat. On the downside, a breach of 6.9450 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “In our latest narrative from last Wednesday (26 Apr, spot at 6.9370), we highlighted that upward momentum in USD has improved further but the major resistance at 6.9650 might not come into view soon. USD traded sideways to slightly lower for a few days before soaring to a high of 6.9630 yesterday. Not surprisingly, upward momentum is strong but 6.9650 remains a major resistance and USD has to break and stay above this level before a move to 7.0000 is likely. On the downside, a break of 6.9200 (‘strong support’ level) would indicate that the USD strength that started more than a week ago has come to an end.”