In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, the ongoing rally could push USD/CNH to the 7.3000 region in the next few weeks.

Key Quotes

24-hourt view: “We highlighted yesterday that USD ‘could test 7.1800 first before the risk of a pullback would increase’. However, USD soared to 7.1915 before pulling back to close largely unchanged at 7.1799 (+0.06%). USD surged above the major resistance at 7.1965 in early Asia trade. The breach of the key resistance is likely to lead to further rapid rise. The levels to watch are at 7.2300 and 7.2500. On the downside, a break of 7.1850 (minor support is at 7.1960) would indicate that the upside risk has eased.”

Next 1-3 weeks: “On Monday (26 Sep, spot at 7.1510), we highlighted that all eyes are on the 2020 high of 7.1960. We indicated that a breach of this major and long-term resistance could lead to an upward acceleration. USD took out 7.1960 in early Asian trade and surged higher. The breach of the key resistance combined with strong upward momentum could carry USD higher to 7.2500, possibly 7.3000. Overall, only a break of 7.1400 (‘strong support’ level was at 7.0950 yesterday) would indicate that the USD strength that started two weeks ago has come to an end.”