In light of the recent price action, FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggest USD/CNH could advance to the 7.1500 region in the next few weeks.

Key Quotes

24-hour view: “While our view for USD to strengthen yesterday was correct, we did not expect the upward acceleration as USD jumped easily above 7.0500 (high has been 7.0800). USD extended its advance during early Asian hours and a break of 7.1000 would not be surprising. The next level to watch is at 7.1200. Support is at 7.0730 followed by 7.0630.”

Next 1-3 weeks: “We have held a positive view since the middle of last week. After USD pulled back sharply from 7.0427, we indicated on Monday (19 Sep, spot at 6.9980) that there is still chance for USD to advance to 7.0500. Our view was correct but we did not quite expect the rapid manner in which USD blew past 7.0500 yesterday. The price actions suggest USD is ready for the next up leg towards 7.1500, possibly to the 2020 high of 7.1960. Overall, only a break of 7.0400 (‘strong support’ level was at 6.9750 yesterday) would indicate that the USD strength has eased.”