USD/CNH eyes the 7.10 region near-term – UOB

FX Strategists at UOB Group keep the constructive view on USD/CNH in the next weeks.

Key Quotes

24-hour view: “Our expectation for USD to ‘trade sideways to slightly higher’ was incorrect as it dropped to a low of 7.0480. Short-term upward pressure has dissipated, and the current movement is viewed as the early parts of a consolidation phase. In other words, USD is expected to trade sideways, likely between 7.0450 and 7.0670.”

Next 1-3 weeks: “After trading mostly sideways for the past several weeks, USD staged a sudden and outsized rally of +0.32% (7.0652). While the ease by which strong resistance levels were taken out has shifted the risk to the upside, we are not convinced USD can maintain the pace of the current rally. From here, we see chance for USD to test the 7.1000 resistance but the prospect for a sustained rise above the major 7.1200 level is not high. Overall, USD is expected to trade on firm footing unless it drops below the ‘strong support’ level of 7.0400”.