USD/CNH: The level to monitor is 7.1200 – UOB Group

FXStreetOct 8, 2024 11:08 AM

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The US Dollar (USD) could strengthen further, but it remains to be seen if it can maintain the rapid pace of advance. The level to monitor is 7.1200, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

USD can strengthen further

24-HOUR VIEW: “Last Friday, USD surged to a high of 7.1036. Yesterday (Monday), we indicated that ‘the sharp and swift rally appears to be overdone, and USD is unlikely to rise much further.’ We expected USD to ‘trade in a range between 7.0700 and 7.1050.’ However, instead of trading in a range, USD sold off sharply to a low of 7.0583, closing at 7.0724 (-0.38%). This time around, the sharp drop appears to be overdone, and instead of continuing to decline, USD is expected to trade in a 7.0590/7.0800 range.”

1-3 WEEKS VIEW: “After USD surged last Friday, we indicated yesterday (07 Oct, spot at 7.0900) that ‘while further USD strength is not ruled out, it remains to be seen if it can maintain the rapid pace of advance.’ We also indicated that ‘the level to monitor is 7.1200, and in order to maintain the rapid buildup of momentum, USD must not break below 7.0500.’ USD subsequent pulled back sharply, and momentum has slowed to an extent. However, only a breach of 7.0500 would indicate that USD is not ready to head higher to 7.1200.”

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