USD/CNH: The pair can break above 7.3100 – UOB Group

The US Dollar (USD) is likely to trade in a range, probably between 7.2920 and 7.3060. USD could break above 7.3100, but it is too early to tell if the next significant resistance at 7.3400 will come into view, UOB Group analysts suggest.

The upside risk is intact above 7.2800

24-HOUR VIEW: “USD traded in a quiet manner two days ago. Yesterday, we highlighted that ‘despite the quiet price action, there has been a slight increase in momentum.’ We expected USD to edge higher, but we were of the view that ‘any advance is unlikely to reach the major resistance at 7.3000.’ The anticipated USD advance exceeded our expectations, as it not only broke above 7.3000 but also came close to the next major resistance at 7.3100 (high has been 7.3080). The pullback from the high in overbought conditions suggests that instead of continuing to rise, USD is more likely to trade in a range today, probably between 7.2920 and 7.3060.”

1-3 WEEKS VIEW: “We turned positive in USD early last week. In our latest narrative from last Friday (21 Jun, spot at 7.2920), we indicated that ‘further USD strength is likely, and the resistance levels to watch are 7.3000 and 7.3100.’ After trading in a relatively quiet manner for a few days, USD took off yesterday and soared to a high of 7.3080. There is still room for USD to rise further, but while a break of 7.3100 will not be surprising, it is too early to tell if the next significant resistance at 7.3400 will come into view this time round. The upside risk is intact as long as 7.2800 is not breached (‘strong support’ level previously at 7.2700).”