Softening underlying tone may lead to US Dollar (USD) edging lower and testing 7.1720 against Chinese Yuan (CNH). In the longer run, increasing momentum suggests USD may rise, but it is too early to expect 7.2000 to come into view, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Increasing momentum suggests USD may rise

24-HOUR VIEW: "When USD was at 7.1825 yesterday, we highlighted that 'there is a chance for USD to rise above 7.1900, but it might not be able to maintain a foothold above this level.' Our view did not materialise, as USD rose to 7.1881 before ending the day largely unchanged (7.1843, +0.04%). Despite the quiet price action, the underlying tone appears to be softening. However, this is likely to lead to USD edging lower and testing 7.1720 instead of a sustained decline. The major support at 7.1630 is unlikely to come under threat. On the upside, resistance levels are at 7.1840 and 7.1900."

1-3 WEEKS VIEW: "Yesterday (09 Jul, spot at 7.1825), we highlighted that 'the increasing upward momentum suggests USD may rise above 7.1900.' USD then rose to 7.1881 before pulling back. There has been no further increase in momentum, but provided that USD holds above 7.1630 (no change in ‘strong support’ level), there is still a chance for USD to rise above 7.1900."