In opinion of FX Strategists at UOB Group, extra gains in USD/CNH are expected to meet a tough barrier in the 7.1560 level.
Key Quotes
24-hour view: “We highlighted last Friday that ‘the rapid but short-lived swings have resulted in a mixed outlook’ and expected USD to ‘trade within a relatively wide range of 7.1050/7.1300’. USD subsequently traded at a higher range than expected (between 7.1083 and 7.1354) before ending the day on a firm note at 7.1337. While the underlying tone has improved, any advance from here is likely limited to a test of the 7.1400 resistance. Support is at 7.1150 followed by 7.1050.”
Next 1-3 weeks: “Despite the relatively strong bounce last Friday (7.1337, +0.32%), upward momentum has not improved by much and it is too early to expect a sustained advance in USD. While USD could edge higher from here, any up move is expected to encounter solid resistance at 7.1560 followed by the year-to-date high near 7.1650 which is acting as a formidable resistance. On the downside, a breach of 7.0800 would indicate the current mild upward pressure has eased.”
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