Further upside appears in store for USD/CNH in the short-term horizon, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We held the view yesterday that USD ‘could strengthen further but the next major resistance at 7.0500 is unlikely to come into view’. We added, ‘there is a minor resistance at 7.0200’. Our view was not wrong USD soared to 7.0225 before ending the day at 7.0110. While the sharp and swift rally appears to be overdone, there is room for the rally to extend to 7.0300 before easing. The major resistance at 7.0500 is still unlikely to come into view for now. Support is at 7.0020, followed by 6.9900.”

Next 1-3 weeks: “There is no change in our view from yesterday (17 May, spot at 7.0005). As highlighted, after breaking above 7.0000, the outlook for USD remains positive. The next level to watch is 7.0500. We will hold a positive USD view as long as it stays above 6.9750 (‘strong support’ level was at 6.9560 yesterday). A break below 6.9750 would indicate the USD strength that started last Friday has eased.”