USD/CNH: A move to 7.2300 appears on the cards – UOB

In light of the recent price action, USD/CNH could extend the bullish attempt to the 7.2300 zone in the near term, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: Yesterday, we highlighted that USD “appears to have moved into a consolidation phase” and we expected it to trade between 7.1680 and 7.2020. USD then dipped to 7.1671, rebounded to 7.2032 before closing on a firm note at 7.1930. Upward momentum has improved somewhat, and USD is likely to trade with an upward bias towards 7.2200 today. A sustained rise above this level appears unlikely. Support is at 7.1860, followed by 7.1720. 

Next 1-3 weeks: Two days ago (21 Jun, spot at 7.1880), we highlighted that while upward momentum is building again, USD must break and stay above 7.2000 before further sustained advance is likely. Yesterday (22 Jun), USD rose to a high of 7.2032. Upward momentum has improved a tad, and there is room for USD to edge higher to 7.2300. At this stage, USD does not appear to have enough momentum to break clearly above this level. The current mild upward pressure is intact as long as USD stays above 7.1580 (‘strong support’ level previously at 7.1500 yesterday).