USD/CNH: Expected to trade in a range between 7.1340 and 7.1480 – UOB Group

FXStreet Insights Team FXStreet

US Dollar (USD) is expected to trade in a range between 7.1340 and 7.1480. In the longer run, upward momentum is starting to build; for a continued advance, USD must first break clearly above 7.1480, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum is starting to build

24-HOUR VIEW: "When USD was at 7.1400 in the early Asian hours yesterday, we were of the view that USD 'could continue to rise toward 7.1480.' We were also of the view that 'a sustained rise above this level is unlikely.' Our assessments were not wrong, as after rising to a high of 7.1502, USD retreated and closed largely unchanged at 7.1416 (+0.08%). There has been no further increase in upward momentum, and today, instead of expecting USD to rise, we expect it to trade in a range between 7.1340 and 7.1480."

1-3 WEEKS VIEW: "Last Tuesday (30 Sep, spot at 7.1275), we highlighted that 'the current price movements are likely part of a range-trading phase between 7.1000 and 7.1480.' Yesterday, we indicated that 'upward momentum is starting to build.' However, we pointed out that 'for a continued advance, USD must first break and hold above 7.1480.' We added, 'the odds of a clear break above 7.1480 will increase in the next few days as long as USD holds above 7.1250.' Although USD subsequently rose above 7.1480 (high was 7.1502), it pulled back and closed at 7.1416 (+0.08%). There has been no further increase in upward momentum, but there is still a chance for USD to break and hold above 7.1480 as long as 7.1250 holds."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.