Sharp rally appears excessive, but there is a chance for US Dollar (USD) to rise further to 7.2250 against Chinese Yuan (CNH), UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Sharp rally appears excessive

24-HOUR VIEW: "We expected USD to 'trade in a range of 7.1700/7.1835' yesterday. The subsequent price movements did not turn out as we expected. Rather than trading in a range, USD rallied and closed higher by 0.44% (7.2129), its largest one-day gain in about four months. The sharp rally appears excessive, and instead of continuing to rally, USD is more likely to consolidate today, probably between 7.1920 and 7.2140."

1-3 WEEKS VIEW: "Two days ago (29 Jul, spot at 7.1820), we indicated that 'upward momentum is building, but for a continued advance, USD must first close above 7.1910.' Yesterday, in a sudden move, USD surged to a high of 7.2140 before closing on a strong note at 7.2129 (0.44%). The sharp rally appears to be excessive, but as long as USD holds above 7.1750 (‘strong support’ level previously at 7.1660), there is a chance for it to rise further to 7.2250."