Considering the recent price action, USD/CNH is now expected to trade within a range bound theme in the next few weeks, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: USD fell to a low of 7.2187 yesterday before closing on a soft note at 7.2340 (-0.30%). While downward momentum has not increased much, there is scope for USD to dip to 7.2080. The major support at 7.1800 is unlikely to come under threat. On the upside, a breach of 7.2500 (minor resistance is at 7.2420) would indicate the current mild downward pressure has faded. 

Next 1-3 weeks: Our most recent update was from last Friday (30 Jun) when we indicated that “USD strength is still intact and the next level to watch is 7.3000”. USD did not reach 7.3000. Yesterday, it fell below our ‘strong support level of 7.2200 (low of 7.2187). The breach of the ‘strong support’ level indicates that the USD strength that started two weeks ago has ended. For now, USD is likely to trade in a range 7.1800/7.2800.