USD/CNH seems to have moved into a consolidative range – UOB

USD/CNH is now seen navigating within the 7.1500-7.2500 range in the next few weeks, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: We highlighted yesterday that “there is a chance of USD breaking above the strong resistance at 7.1930.” We added, “The major resistance at 7.2180 is unlikely to come into view.” In NY trade, USD broke above 7.1930 and reached 7.1968. Despite the advance, upward momentum has increased only slightly. That said, there is a chance for USD to rise above 7.2180 today. This time around, the major resistance at 7.2500 is unlikely to come into view. On the downside, if USD breaks below 7.1710 (minor support is at 7.1820), it would suggest that the current mild upward pressure has eased.

Next 1-3 weeks: We turned negative in USD last Monday (10 Jul, spot at 7.2230). After USD dropped to 7.1240 and rebounded, we indicated two days ago (17 Jul, spot at 7.1500) that while USD “is still weak, the next major support at 7.1000 may not come into view so soon.” Yesterday (18 Jul, spot at 7.1820), we noted that “upward momentum is beginning to fade.” However, we were of the view that only a break above 7.1930 would suggest that 7.1000 is not coming into view this time around. USD rose above 7.1930 in NY trade. In other words, USD is not weakening further For the time being, USD is likely to trade in a range, probably between 7.1500 and 7.2500