Quek Ser Leang at UOB Group’s Global Economics & Markets Research assesses the prospect for USD/CNH.
Key Quotes
“In the FX Technical section of our Quarterly Global Outlook published on 19 Mar 2021 (when USD/CNH was trading at 6.4980), we held the view that ‘the recovery in USD/CNH has plenty of room, both price and time-wise to extend further even though the major resistance at 6.6700 could be out of reach’. We added, ‘a break of 6.4400 would indicate that USD/CNH is not ready for a recovery’.
“While our expectation for a recovery was not wrong as USD/CNH rose to 6.5878, it was unable to hold on to its gains. The subsequent decline cracked 6.4400 in early May and the breach of the year-to-date low of 6.4009 on Tuesday (25 May) sent USD/CNH plummeting. Weekly MACD is beginning to turn negative and the risk within these couple of months is on the downside. However, until weekly MACD is deeper in negative territory, it is premature to expect the start of long-term downtrend. To look at it another way, the long-term support at 6.2364 (the low in 2018) is unlikely to come in to the picture within these few months.”
“In order to maintain the current downward momentum, USD/CNH should not move above the declining trend-line resistance (currently at 6.4800). On a shorter-term note, 6.4400 is already quite a strong level. On the downside, there is a minor support 6.3300 but the stronger support is at 6.3000.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.