Chinese Yuan: Gradual appreciation bias with key levels against US Dollar – OCBC

OCBC’s Sim Moh Siong and Christopher Wong highlight that RMB and CNH remain supported by softer USD dynamics and exporter conversion, but the People’s Bank of China is signalling a preference for gradual gains via its fixing. USD/CNH trades with mild bearish momentum and oversold RSI, with downside bias tempered by the risk of a snapback around clearly defined support and resistance levels.

USDCNH downside skew but measured

"RMB ended the week near multi-year highs, but the fixing continues to signal some resistance to the pace of appreciation."

"Friday’s USDCNY midpoint was nudged slightly higher to 6.7817 and remained around 550 pips above market expectations, suggesting the PBoC remains comfortable with gradual RMB strength but is leaning against an overly rapid or one-way move."

"Softer USD dynamics and exporter conversions should remain supportive, though the fixing behaviour reinforces our view that any further appreciation is likely to remain gradual."

"USD/CNH last closed at 6.7210 levels. Daily momentum is mild bearish while RSI fell into oversold conditions. Bias remains skewed to the downside though risk of snapback not ruled out."

"Resistance at 6.7480 (21 DMA), 6.7540. Support here at 6.72, 6.7140 (61.8% fibo retracement of 2022 low to triple-top) and 6.70 levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)