USD/CNH: Next on tap emerges 7.0000 and 7.0200 – UOB

According to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, the continuation of the upside bias could encourage USD/CNH to retest the 7.0000 region ahead of 7.0200 in the next weeks.

Key Quotes

24-hour view: “Last Friday, we indicated that ‘as long as 6.8900 is not breached, USD could rise to 6.9300 before the risk of a more sustained pullback increases’. While USD did not break 6.8900 (low has been 6.9118), the anticipated USD strength exceeded our expectations by a wide margin as USD rocketed to a high of 6.9820. Further USD strength is not ruled out but deeply overbought conditions suggest the major resistance at 7.0000 is unlikely to come into view today. Support is at 6.9650, followed by 6.9550.”

Next 1-3 weeks: “We have expected USD to move higher since the start of the month. In our most recent narrative from last Friday (24 Feb, spot at 6.9160), we indicated that USD ‘has to break above 6.9300 within the next 1-2 days or the risk of an end to the USD strength will increase quickly’. Our view was not wrong even though we did not quite expect the manner in which USD blew past 6.9300 and surged to a high of 6.9820. The boost in upward momentum is likely to lead to further USD strength. The resistance levels to watch are at 7.0000 and 7.0200. The upside risk is intact as long as USD stays above 6.9220 (‘strong support’ level previously at 6.8700).”