USDCNH looks further down

9월 26일

Although dollar-yuan has been in a fairly clear downtrend since last month, it has gained pace in the last few days as the probability of another double cut by the Fed in November has increased slightly and the Chinese government is expected to announce further stimulus. For the time being, the price seems to have broken ¥7 firmly and momentum remains high.

How much lower it might continue depends on seasonality next week but also on saturation given that there’s a strong oversold signal from both Bollinger Bands and the slow stochastic. The 61.8% weekly Fibonacci retracement around ¥6.955 seems to be an obvious potential support; this was also an important area in December 2022 and February 2023. ¥6.70 might be the ultimate target for many long-term sellers because this was the source of January 2023’s bounce.

Whether and when the price might push that low depends initially on markets’ reaction to Chinese manufacturing PMI early on Monday morning as well as next week’s NFP. To the upside, the 50% weekly Fibonacci retracement slightly above ¥7.03 might cap any short-term bounce.

This is my personal opinion which does not represent the opinion of Exness. This is not a recommendation to trade.