Markets Strategist Quek Ser Leang and Economist Lee Sue Ann at UOB Group still see the likeliness of USD/CNH breaking above the 7.3000 region in the next weeks.

Key Quotes

24-hour view: “While we expected USD to strengthen yesterday, we were of the view that ‘any advance is expected to face strong resistance at 7.2380’. However, USD not only blew past 7.2380 but also notched a fresh record high of 7.2743. While deeply overbought, the rally is not showing any signs of weakening just yet. That said, the next major resistance at 7.3000 is unlikely to come under challenge for now (there is another resistance at 7.2850). On the downside, support is at 7.2550 but only a break of 7.2400 would indicate that the current strong upward pressure has eased.”

Next 1-3 weeks: “We turned positive on USD late last week. After USD soared to 7.2380 and eased off, we indicated that USD has to break above this level before a sustained rise is likely. Yesterday (19 Oct, spot at 7.2230), we highlighted that the risk of USD breaking above 7.2380 is increasing. We added, ‘A break of this level would shift the focus to the Sep high near 7.2670’. While our view was not wrong, we did not expect the strong and swift surge as USD blew past both 7.2380 and 7.2670. Not surprisingly, upward momentum is strong and there is a good chance for USD to break 7.3000 next. The upside risk remains intact as long as USD does not break the ‘strong support at 7.2150 (level was at 7.1800 yesterday).”