USD/CNH: USD must not break below 7.0500 – UOB Group

FXStreet Insights Team FXStreet

The US Dollar (USD) could strengthen further, but it remains to be seen if it can maintain the rapid pace of advance, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

The level to monitor is 7.1200

24-HOUR VIEW: “Last Friday, we expected USD to edge higher, but we were of the view that ‘any advance is unlikely to reach 7.0710.’ Instead of edging higher, USD surged, reaching a high of 7.1036. The sharp and swift rally appears to be overdone, and USD is unlikely to rise much further. Today, USD is more likely to trade in a range, probably between 7.0700 and 7.1050.”

1-3 WEEKS VIEW: “The level to monitor is 7.1200. Last Thursday (03 Oct, spot at 7.0380), we indicated that ‘the recent USD weakness has stabilised.’ We also indicated that ‘the current price movements are likely part of a range trading phase, probably between 6.9900 and 7.0800.’ On Friday, USD surged above 7.0800 and reached 7.1036. USD closed on a strong note, up by 0.69% (7.0991), its second biggest 1-day gain this year. While further USD strength is not ruled out, it remains to be seen if it can maintain the rapid pace of advance. The level to monitor is 7.1200. In order to maintain the rapid buildup of momentum, USD must not break below 7.0500.”

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