USD/CNH: Further consolidation on the cards near term – UOB

USD/CNH is now likely no trade within the 7.0900-7.1800 range in the next few weeks, note Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: We expected USD to trade in a range of 7.1200/7.1630 yesterday. USD then traded between 7.1308 and 7.1672. The underlying tone has improved somewhat and USD is likely to trade with an upward bias today. However, any advance is unlikely to break clearly above 7.1800. Support is at 7.1580; a breach of 7.1400 would suggest the current mild upward pressure has faded. 

Next 1-3 weeks: Our update from last Friday (16 Jun, spot at 7.130) still stands. As highlighted, the recent USD strength has ended. USD has likely moved into a consolidation phase and is likely to trade between 7.0900 and 7.1800 for the time being. Looking ahead, if USD were to surmount the major resistance at 7.2000, it would suggest that USD strength has resumed.