USD/CNH: Downward momentum is slowing rapidly – UOB Group

Room for US Dollar (USD) to continue to rise against the Chinese Yuan (CNH), but it does not appear to have enough momentum to break above 7.2600. In the longer run, downward momentum is slowing rapidly; a breach of 7.2600 would mean that USD is likely to trade in a range instead of declining, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD doesn't have enough momentum to break above 7.2600

24-HOUR VIEW: "We expected USD to 'trade between 7.2070 and 7.2370' yesterday. Instead of trading in a range, USD rose to 7.2463. Despite the advance, upward momentum has not increased significantly. However, there is room for USD to continue to rise today, but it does not appear to have enough momentum to break above the strong resistance at 7.2600. Support is at 7.2300; a breach of 7.2180 would indicate that USD is not rising further."

1-3 WEEKS VIEW: "Our most recent narrative was from 06 May (when USD was at 7.2150), wherein 'although a further decline remains possible, the deeply oversold short-term conditions suggest that the USD may range-trade for a few days before resuming its decline.' Since then, USD has not been able to make any headway on the downside. Downward momentum is slowing rapidly, and a breach of 7.2600 (no change in ‘strong resistance’ level) would mean that USD is likely to trade in a range instead of declining."