The continuation of the upside bias could propel USD/CNH to the 7.1200 region in the short-term horizon, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We expected USD to strengthen yesterday but we were of the view that it ‘is unlikely to challenge last Friday’s high of 7.0750’. While our view was correct as USD rose to 7.0721, it broke above 7.0750 in Asian trade today. Strong upward momentum is likely to lead to further advance and it might break above the major resistance at 7.0960. Support is at 7.0600, followed by 7.0450.”

Next 1-3 weeks: “We have held a positive USD view for close to 2 weeks now. In our latest narrative from two days ago (22 May, spot at 7.0215), we noted that short-term upward momentum is beginning to fade and the chance of USD rising to 7.0960 this time around has diminished. We added, ‘only a break of 7.0000 would indicate the USD strength has ended’. Yesterday, USD soared to 7.0721 and it extended its advance in Asian trade. The boost in momentum suggests USD is likely to break above 7.0960. A breach of this level will shift the focus to 7.1200. On the downside, the ‘strong support’ level has moved higher from 7.0000 to 7.0280.”