USD/CNH Likely to Trade in a Narrow Range of 7.1850/7.2450 – UOB Group

USD/CNH: Limited Movement Expected, Range-Bound Trading Ahead – UOB Group

The US Dollar (USD) is expected to continue trading in a narrow range against the Chinese Yuan (CNH), with UOB Group's FX strategists forecasting a trading range between 7.1850 and 7.2450 for the pair. After an initial period of upward momentum, the market has seen a slowdown in movement, with momentum stalling.

Downward Momentum Fizzles Out

UOB Group's strategists, Quek Ser Leang and Peter Chia, highlighted that despite an initial tentative buildup of upward momentum when the USD reached 7.2160 during the early Asian session, the currency pair failed to break through key resistance levels. The USD managed to reach a high of 7.2260 before retreating and closing the day almost flat at 7.2146, signaling that upward momentum has largely fizzled out. As a result, the USD/CNH is expected to continue trading within a relatively tight range in the short term.

Looking Ahead: Limited Upside Potential

The strategists anticipate that the USD/CNH pair will remain range-bound for now, with the most likely range seen between 7.2050 and 7.2250. While there are some minor resistance levels that could limit further upside movement, the current market conditions suggest that a significant shift in momentum is unlikely unless there are major economic or geopolitical developments.

Overall, the USD is expected to maintain its range-bound trading against the CNH, and traders will likely monitor key economic data releases or central bank signals that could influence the direction of the USD/CNH pair in the near future.