USD/CNH: The 7.04 region could be the next target - UOB

Pablo Piovano FXStreet

USD/CNH could extend the upside momentum to the 7.04 area in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday ‘severely overbought short-term conditions suggest the strong rally in USD is likely to take a breather’. While our view was not wrong, the registered range of 6.9650/6.9885 was narrower than our expected sideway-trading range of 6.9600/7.0000. The movement is still viewed as part of a sideway-trading phase even though the weakened underlying tone suggests USD is likely to trade at a lower range of 6.9500/6.9820.”

Next 1-3 weeks: “While we have held the same view since last Wednesday (22 Jan, spot at 6.9100) wherein ‘a short-term bottom is in place’ and the \corrective recovery in USD could extend to 6.9650’, the manner by USD exceeded the 6.9650 level yesterday (27 Jan) came as a surprise. Note that the 1-day gain of +0.76% yesterday is the largest since the ‘snap back’ in mid-December. While 7.0000 is another strong resistance, the impulsive momentum suggests USD could extend its gains above this level to 7.0400. Only a move back below 6.9350 would indicate that the current advance in USD has run its course.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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