USD/CNH: Surge in momentum suggests further USD strength – UOB Group
The US Dollar (USD) is likely to trade in a range between 7.1350 and 7.1770. In the longer run, surge in momentum suggests further USD strength, but the pace and extent is likely to be more moderate, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
USD to trade in a range between 7.1350 and 7.1770
24-HOUR VIEW: “Our view for USD to rise above 7.2200 yesterday did not turn. After reaching a high of 7.2133, it staged an unexpectedly sharp drop, reaching a low of 7.1420. The decline appears to be excessive, and USD is unlikely to weaken much further. Today, USD is more likely to trade in a range between 7.1350 and 7.1770.”
1-3 WEEKS VIEW: “The level to watch is 7.2400. USD soared by 1.48% two days ago, closing at 7.2040. Yesterday (07 Nov, spot at 7.2020), we indicated that ‘The surge in momentum suggests further USD strength, but severely overbought conditions suggest the pace and extent is likely to be more moderate.’ We indicated that ‘The level to watch on the upside is 7.2400,’ and ‘should USD breach 7.1300, it would indicate that the rally is ready to take a breather.’ We did not anticipate the sharp pullback that reached a low of 7.1420. Although momentum has slowed, we will continue to hold the same view as long as 7.1300 is not breached.”
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