According to FX Strategists at UOB Group, USD/CNH could gather extra traction and retest the 7.1650 level in the next weeks.
Key Quotes
24-hour view: “The sudden and strong surge in USD from last Friday appears to be running ahead of itself. That said, upward momentum is still strong and it is too early to expect a pull-back. From here, USD could edge higher but any advance is viewed as a higher trading range of 7.1200/7.1600.”
Next 1-3 weeks: “We highlighted last Monday (27 Apr, spot at 7.0850) that ‘downside risk in USD is beginning to increase’ and added, ‘only a break of 7.0650 would improve the prospect of USD moving towards 7.0370’. USD dropped to 7.0535 on Thursday (30 Apr) before surging suddenly to a high of 7.1405 on Friday. The strong rebound appears to have room to test the March’s peak near 7.1650. At this stage, the odds for USD to move above this level in a sustained manner are not high. All in, the outlook is for USD is deemed as positive as long as it holds above 7.0850.”
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