Further upside in USD/CNH is unlikely to surpass the 7.3745 level in the next weeks, noted Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘The rapid rise in USD has room to extend but in view of the overbought conditions, a sustained rise above 7.3500 is unlikely’. While USD subsequently rose to 7.3550, it staged a surprisingly sharp drop to 7.2600 before rebounding to close at 7.3034 (-0.46%). The choppy movement is likely part of a broad sideways range and we expect USD to trade within a range of 7.2500/7.3400 today.”

Next 1-3 weeks: “We highlighted yesterday (01 Nov, spot at 7.3335) that upward momentum has improved and USD could rise above 7.3500 but last week’s high near 7.3745 is unlikely to come into view for now. USD subsequently rose to 7.3550 before dropping back sharply. While upward momentum has not improved, as long as 7.2400 (no change in ‘strong support’ level from yesterday) is not breached, there is still chance for USD to head higher. That said, a break of 7.3745 appears unlikely.”