USD/CNH: Consolidation ahead of extra gains? – UOB

USD/CNH could face some consolidative period ahead of the resumption of the uptrend according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: Last Friday, USD dipped briefly to 7.2828 then rebounded to end the day largely unchanged (7.3068, +0.09%). The price movements appear to be consolidative. Today, we expect USD to trade in a range, likely between 7.2920 and 7.3300. 

Next 1-3 weeks: Last Thursday (17 Aug), USD surged to a high of 7.3490 before pulling back. The pullback in overbought conditions suggests USD could consolidate for a few days. Overall, as long as 7.2500 (‘strong support’ level) is not breached, there is scope for USD to break above 7.3490 at a later stage. In view of the overbought conditions, the major and long-term resistance near 7.3745 (last year’s peak) is likely out of reach.