UOB Group’s Markets Strategist Quek Ser Leang and Economist Lee Sue Ann see the upside momentum in USD/CNH facing the next resistance at 7.2670 in the short term.
24-hour view: “Our expectation for USD to ‘trade sideways within a range of 7.1850/7.2200’ was incorrect as it popped to a high of 7.2332 before closing of a firm note at 7.2250 (+0.25%). Upward momentum has improved, albeit not by much. USD is likely to trade with an upward bias but any advance is expected to face strong resistance at 7.2380. Support is at 7.2100, followed by 7.2000.”
Next 1-3 weeks: “Last Friday (14 Oct, spot at 7.1880), we highlighted that further USD strength is not ruled out but 7.2380 is acting as a solid resistance now and USD has to break this level before a sustained rise is likely. Yesterday, USD rose to a high of 7.2332 before closing at 7.2250 (+0.25%). The risk of USD breaking above 7.2380 is increasing. A break of this level would shift the focus to the Sep high near 7.2670. Overall, only a breach of 7.1800 (‘strong support’ level was at 7.1500 yesterday) would indicate that the upside risk has subsided.”
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