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FX Strategists at UOB Group keep the bullish bias unaltered in USD/CNH, with the next level of relevance at 7.2000.

Key Quotes

24-hour view: “We highlighted yesterday that ‘a clear break of last week’s 7.1645 top could lead to a rush higher in USD’. USD subsequently blast past 7.1645 and soared to 7.1966 before easing off. Upward momentum remains robust and further USD strength would not be surprising. That said, overbought conditions suggest that any advance above 7.2000 may not be sustainable. Support is at 7.1680 but only a breach of 7.1600 would indicate that the current strong advance is ready to take a breather.”

Next 1-3 weeks: “We warned yesterday ‘the risk of USD breaking above 7.1652 has increased’ and highlighted that such a move ‘could potentially lead to a sharp and rapid rise’. While the subsequent rally did not break the major 7.2000 level (high of 7.1966), strong upward momentum suggests the risk for the coming days is still on the upside. Note that the record high was at 7.1960 in September last year and from here, a break of 7.2000 could potentially lead to further strong gains as once above this ‘round number’ resistance, the next resistance level of note is nearer to 7.2400. All in, the current positive outlook is deemed as intact as long as USD holds above 7.1400 (‘strong support’ level was at 7.1100 yesterday).”