Despite the positive outlook for USD/CNH, the 7.1652 level is seen out of reach for the time being, noted FX Strategists at UOB Group.
24-hour view: “The sudden surge in USD that resulted in a relatively strong gain of +0.41% yesterday (7.1352) came as a surprise. The rapid advance appears to be running ahead of itself and while USD could move above the overnight high of 7.1361, a sustained advance above this level is unlikely (there is another strong resistance at 7.1450). Support is at 1.1200 but only a breach of 7.1140 would indicate the current upward pressure has eased.”
Next 1-3 weeks: “USD popped above the top of our expected 7.0800/7.1350 range yesterday (high of 7.1361) before ending the day on a firm note at 7.1352. While upward momentum has picked up, USD does not appear to be ready to move higher in a sustained manner just yet. The overall outlook appears to be mildly positive and there is chance that USD could edge higher but the year-to-date high is a formidable resistance and may not break so easily. To look at it another way, only a daily closing above 7.1652 would ‘confirm’ a break-out. At this stage, the prospect for such a move is not high but it would continue to increase as long as the strong support at 7.0800 is not taken out.”
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