There is scope for US Dollar (USD) to edge above 7.1280, but it is unlikely to be able to maintain a foothold above this level. In the longer run, upward momentum is increasing, but USD must first close above 7.1280 before a move toward 7.1370 can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD/CNH upward momentum is increasing
24-HOUR VIEW: “Last Friday, we expected USD to ‘consolidate between 7.0100 and 7.1180’. Our view was incorrect, as USD rose to a high of 7.1261. Upward momentum has increased, albeit not by much. Today, there is scope for USD to edge above 7.1280 but it is unlikely to be able to maintain a foothold above this level. Support is at 7.1160, followed by 7.1100.”
1-3 WEEKS VIEW: “After holding a negative USD view for about two weeks, we revised our outlook to neutral last Friday (31 Oct, spot at 7.1085). We indicated that ‘the weakness in USD has stabilized’, and we held the view that USD ‘is likely to trade between 7.0920 and 7.1280’. We did not expect USD to rise near to 7.1280 so soon (high was 7.1261). Upward momentum is increasing, but it is not sufficient to indicate a sustained advance just yet. USD must close above 7.1280 before a move toward 7.1370 can be expected. The likelihood of USD closing above 7.1280 will remain intact as long as 7.1020 is not breached.”
