USD/CNH: Momentum remains strong – UOB Group

Overbought advance could retest the 7.3145 level before a more sustained pullback can be expected. Momentum remains strong; the next significant resistance is at last year’s high of 7.3678, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

Next significant resistance is at last year’s high of 7.3678

24-HOUR VIEW: “While we held the view that USD ‘may rise further and break above 7.3000’ yesterday, we indicated that ‘the major resistance at 7.3115 is likely out of reach for now.’ We underestimated the upward momentum, as USD soared to a high of 7.3145, easing off to close at 7.2985, higher by 0.17% for the day. Despite being deeply overbought, the advance appears to have enough momentum to retest the 7.3145 level before a more sustained pullback can be expected. The next resistance at 7.3300 is not expected to come under threat. On the downside, support is at 7.2860, followed by 7.2750.”

1-3 WEEKS VIEW: “We turned positive in USD yesterday (03 Dec, spot at 7.2880), indicating the ‘rapid increase in momentum could lead to USD rising to 7.3115.’ We did not expect USD to exceed the technical target as quickly, as it surged to a high of 7.3145. Momentum remains strong, and now that USD has broken above 7.3145, the next significant resistance level is at 7.3678, last year’s high. To sustain the momentum, USD must not break below 7.2630 (‘strong support’ level was at 7.2550 yesterday).”