USD/CNH to test 7.1420 before the risk of a pullback increases – UOB Group
There is scope for US Dollar (USD) to test 7.1420 before the risk of a pullback increases; 7.1500 is unlikely to come into view today. In the longer run, increasing upward momentum could lead to further advances in USD but note the significant resistance level at 7.1500, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Increasing upward momentum could lead to further advances in USD
24-HOUR VIEW: "Yesterday, we expected USD to 'trade between 7.1100 and 7.1220.' Our expectation turned out to be incorrect, as in a sudden move, USD lifted off and soared, reaching a high of 7.1400. While the sharp rise appears to be overdone, there is scope for USD to test 7.1420 before the risk of a pullback increases. We do not expect the major resistance at 7.1500 to come into view today. On the downside, support levels are at 7.1290 and 7.1240."
1-3 WEEKS VIEW: "Our most recent narrative was from Monday (22 Sep, spot at 7.1185), in which we highlighted that USD 'appears to have entered a consolidation phase, but given the slightly firmer underlying tone, it is likely to test the top of the expected 7.1000/7.1360 range first.' USD then traded sideways for a few days, until yesterday, when it soared and broke above 7.1360, reaching a high of 7.1400. While the increasing upward momentum could lead to further advances in USD, it is worth noting that 7.1500 is a significant resistance level. On the downside, a breach of 7.1150 (‘strong support’ level) would mean that USD is not rising further."
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FXStreet Insights Team
FXStreet
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