USD/CNH could still advance further and test the 7.0500 region in the next weeks, comment FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We expected ‘the pullback in USD to extend’ yesterday. Instead of pulling back, USD traded between 6.9905 and 7.0254 before closing little changed at 7.0038 (+0.08%). The movement appears to be part of a consolidation and USD is likely to trade within a range of 6.9800/7.0200 for today.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (19 Sep, spot at 6.9980). As indicated, while the sharp pullback from the high of 7.0427 has dented the upward momentum somewhat, there is still chance for USD to advance to 7.0500. Only a break of 6.9660 (no change in ‘strong support’ level from yesterday) would indicate that the USD strength that started the middle of last week has run its course.”