The U.S. Dollar (USD) is projected to fluctuate between 7.2070 and 7.2370 against the Chinese Yuan (CNH) in the immediate term. According to FX analysts Quek Ser Leang and Peter Chia at UOB Group, the USD may experience range-bound trading for a short period before potentially resuming its downward trajectory. The key level to monitor in this scenario is 7.1700. Market participants are closely watching upcoming economic data releases from both the U.S. and China, which could influence the currency pair’s movement. These include inflation figures, manufacturing indices, and trade balance reports, which will provide further insights into the relative strength of the two economies.
USD can range-trade for a few days
24-HOUR VIEW: “In our assessment yesterday, we observed that ‘the outlook for USD is mixed’ and anticipated trading within a 7.1900/7.2300 range. This forecast proved accurate, with the USD trading between 7.1895 and 7.2298. The current price action offers no significant new indications. For today’s trading session, we anticipate the USD to oscillate between 7.2070 and 7.2370.” Market sentiment remains cautious as traders await further catalysts to drive directional movement. Geopolitical factors and shifts in global risk appetite could also contribute to short-term volatility in the USD/CNH pair.
1-3 WEEKS VIEW: “Two days prior, on May 6th, with the USD at 7.2150, we emphasized that ‘although a continued decline remains a possibility, the significantly oversold short-term conditions suggest that the USD may engage in range-bound trading for several days before resuming its decline.’ We reiterated that ‘the level to watch is at 7.1700.’ Our perspective remains unchanged. Critically, only a breach of 7.2600 (with no alteration to the ‘strong resistance’ level) would negate the expectation of further USD depreciation.” Investors are also keeping an eye on potential policy adjustments from both the Federal Reserve and the People’s Bank of China, which could have a substantial impact on the USD/CNH exchange rate. Any unexpected announcements or shifts in monetary policy stance could trigger significant market reactions.
