USD/CNH: The pair has the chance to drop to 7.2900 – UOB Group

FXStreet Insights Team FXStreet

The US Dollar (USD) could drop to 7.2900. The next support at 7.2800 is unlikely to come under threat, UOB Group analysts Quek Ser Leang and Peter Chia note.

A sustained breach above 7.3100 is on the board

24-HOUR VIEW: “We indicated out yesterday that ‘the underlying tone still appears to be firm, and we continue to expect USD to edge above 7.3100.’ However, we pointed out that ‘the next resistance at 7.3200 is unlikely to come into view.’ While USD subsequently edged above 7.3100 (high of 7.3114), it fell sharply from there to a low of 7.2924. USD rebounded from the low and closed at 7.3025 (-0.06%). Downward momentum is beginning to build, and USD could drop to 7.2900. The next support at 7.2800 is unlikely to come under threat. Resistance is at 7.3050, followed by 7.3100.”

1-3 WEEKS VIEW: “We have held a positive USD view over the past two weeks. In our most recent narrative from last Thursday (27 Jun, spot at 7.2990), we indicated that 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. Yesterday, USD rose above 7.3100, reaching a high of 7.3114 before falling sharply to 7.2924. While our ‘strong support’ level at 7.2880 has not been breached yet, upward momentum has largely dissipated. The current price movements are likely part of a consolidation. For the time being, we expected USD to trade between 7.2700 and 7.3100.”

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