USD/CNH: A sustained upside is seen above 7.2380 – UOB

Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group expect USD/CNH to advance on a sustainable fashion once 7.2380 is cleared.

Key Quotes

24-hour view: “We did not expect the sharp surge in USD to 7.2379 and the equally sharp drop from the high. The large but short-lived swings have resulted in a mixed outlook and USD could trade between 7.1600 and 7.2200 for the time being.”

Next 1-3 weeks: “We held the view yesterday that the risk is on the upside but USD has to break clearly above 7.2200 before further advance is likely. While USD broke clearly above 7.2200 in NY trade, it dropped back sharply from a high of 7.2379. Further USD strength is not ruled out but 7.2380 is acting as a solid resistance now and USD has to break this level before a sustained rise is likely. Overall, only a breach of 7.1400 (‘strong support’ was at 7.1250 yesterday) would indicate that the upside risk has subsided.”