USD/CNH to test 7.1165 before the risk of a recovery increases – UOB Group

There is scope for US Dollar (USD) to test 7.1165 before the risk of a recovery increases. In the longer run, for the time being, USD is likely to trade in a range between 7.1000 and 7.1480, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD is likely to trade in a range between 7.1000 and 7.1480

24-HOUR VIEW: “Our view of range-trading yesterday was incorrect, as USD fell sharply to a low of 7.1169 (-0.16%). While the decline appears excessive, there is scope for USD to test 7.1165 before the risk of a recovery increases. Based on the current momentum, we do not expect the next support at 7.1000 to come into view. On the upside, resistance levels are at 7.1350 and 7.1400.”

1-3 WEEKS VIEW: “We turned positive on USD early last week (see annotations in the chart below). In our latest narrative from last Friday (26 Sep, spot at 7.1435), we highlighted that ‘upward momentum continues to increase, and if USD breaks above 7.1500, the next level to watch is 7.1600.’ Yesterday, in a sudden move, USD fell and broke below our ‘strong support’ level at 7.1250 (low has been 7.1169). The breach of our ‘strong support’ level indicates that upward momentum has faded. The current price movements are likely part of a range-trading phase. For the time being, USD is likely to trade in a range between 7.1000 and 7.1480.”