USD/CNH needs to surpass 7.2380 to allow for extra gains – UOB

UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia suggest USD/CNH needs to clear 7.2380 to allow for a sustained upside in the near term.

Key Quotes

24-hour view: “Our view for USD to ‘trade with an upside bias’ did not materialize as it traded sideways within a range of 7.1903/7.2220 before closing largely unchanged at 7.2073 (-0.07%). Momentum indicators are mostly neutral and further sideway-trading would not be surprising. Today’s expected range is 7.1850/7.2200.”

Next 1-3 weeks: “There is not much to add to our update from last Friday (14 Oct, spot at 7.1880). As highlighted, further USD strength is not ruled out but 7.2380 is acting as a solid resistance now and USD has to break this level before a sustained rise is likely. Overall, only a breach of 7.1500 (no change in ‘strong support’ level) would indicate that the upside risk has subsided.”