USD/CNH could see its gains accelerated on a break above the 7.2380 in the next weeks, note UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “Last Friday, we expected USD to ‘trade between 7.1600 and 7.2200’. USD dropped to a low of 7.1600, rebounded strongly to a high of 7.2284 in London trade before trading sideways for the rest of the sessions. The underlying tone has firmed somewhat and the bias for today is on the upside. However, any advance is unlikely to break the major resistance at 7.2380. Support is at 7.1930, followed by 7.1720.”

Next 1-3 weeks: “There is not much to add to our update from last Friday (14 Oct, spot at 7.1880). As highlighted, further USD strength is not ruled out but 7.2380 is acting as a solid resistance now and USD has to break this level before a sustained rise is likely. Overall, only a breach of 7.1500 (‘strong support’ was at 7.1400 last Friday) would indicate that the upside risk has subsided.”