Reuters – The USDCNH is worth 7.1 per dollar, moving closer to seven-month highs as the greenback weakens sharply. This trend is fueled by expectations that the US Federal Reserve will begin reducing interest rates next year. Additionally, an improvement in risk sentiment and increased capital inflows into China are contributing factors. This is further evidenced by a rebound in mainland stocks, which boosts the yuan.
USDCNH Analysis: A Technical View
USDCNH sellers are currently dealing with a crucial demand zone, stretching from 7.0971 to 7.1024. A glance at the technical indicators suggests that the market might be oversold. The Stochastic indicator hovers below the 20 level, while the RSI indicator is nearing 70.
If the USDCNH price stays above this critical support, it may enter a consolidation phase. In this scenario, the market could recover from the oversold state, potentially rising to the 38.2% Fibonacci retracement level.
On the other hand, a slight breach below the 7.0971 support level would indicate a continuation of the sharp downtrend.