USDCNH: Further side-lined trading within 7.0600-7.2100 – UOB

Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group expect USDCNH to extend the consolidative theme within the 7.0600-7.2100 range in the near term.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘there is room for USD to test 7.1200 first before the risk of a pullback increases’. However, USD blew past 7.1200 and soared to a high of 7.1787 before pulling back sharply. The pullback amid overbought conditions suggests USD is unlikely to advance further. For today, USD is more likely to trade sideways between 7.1200 and 7.1700.”

Next 1-3 weeks: “While we warned yesterday (17 Nov, spot at 7.1020) that downward momentum has waned and the chance of further USD weakness has diminished, we did not anticipate the strong surge to a high of 7.1787. Downward momentum has dissipated and USD has likely moved into a consolidation phase. In other words, USD is likely to trade sideways for now, expected to be between 7.0600 and 7.2100.”