USD/CNH: Likely to trade in a range between 7.1800 and 7.2300 – UOB Group

Increase in momentum is likely to lead to US Dollar (USD) advance, potentially to 7.2130. In the longer run, for now, USD is likely to trade in a range between 7.1800 and 7.2300, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Increase in momentum is likely to lead to USD advance

24-HOUR VIEW: "USD rebounded to 7.1935 two days ago. Yesterday, we noted that 'The rebound lacks momentum, and instead of extending further, USD is likely to trade between 7.1750 and 7.1950.' USD subsequently traded in a 7.1860/7.1990 range. Although USD closed largely unchanged at 7.1928 (+0.01%), it lifted off and surged today. The increase in momentum is likely to lead to further advance, potentially to 7.2130. The next resistance at 7.2300 is probably out of reach. To maintain the momentum, USD must hold above 7.1900 (minor support is at 7.1980)."

1-3 WEEKS VIEW: "On Monday (26 May, spot at 7.1770), we indicated that 'while downward momentum has not increased significantly, as long as 7.2070 (‘strong resistance’ level) is not breached, the bias for USD is on the downside toward 7.1500. After USD dropped to 7.1626 and rebounded, we indicated yesterday (28 May, spot at 7.1880) that 'downward momentum is slowing and a breach of 7.2020 would mean that the downward bias has faded.' USD rose above 7.2020 today. For now, we expect USD to trade in a range, most likely between 7.1800 and 7.2300."