USD/CNH: Can breach 7.1800 near term – UOB Group

Impulsive advance in early Asian trade could extend to 7.1550 before levelling off. In the longer run, downward momentum has largely faded; USD could trade in a broad 7.0900/7.1800 range, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann notes.

USD to trade in a broad 7.0900/7.1800 range

24-HOUR VIEW: “On Monday, USD plunged to 7.0876 and then rebounded. Yesterday, we pointed out that ‘The rebound in oversold conditions suggests that instead of continuing to weaken, USD is likely to trade in a range, probably between 7.1000 and 7.1250.’ USD then traded in a 7.0990/7.1169 range. In a sudden move in early Asian trade today, it surged. The impulsive advance could extend to 7.1550 before levelling off. The major resistance at 7.1800 is unlikely to come into view. Support levels are at 7.1200 and 7.1000.”

1-3 WEEKS VIEW: “We turned negative in USD last Friday (01 Nov, spot at 7.1250). We indicated USD ‘could edge lower, but any decline is expected to encounter solid support at 7.1000.’ After USD plummeted below 7.1000, we highlighted yesterday that ‘The increasing downward momentum, combined with the breach of 7.1000, suggests USD is likely to decline further, potentially to 7.0660.’ In a sudden move early today, USD jumped. While our ‘strong resistance’ level at 7.1380 has not been breached yet, downward momentum has largely faded. The outlook is mixed from here, and USD could trade in a broad 7.0900/7.1800 range for now.”