USD/CNH Price Analysis - Breaking Lower as US-China Trade Deal Nears
USD/CNH Price Forecast, Analysis and Chart:
- China will sign phase one of US-China trade deal next week.
- USD/CNH may be allowed to slip lower.
USD/CNH Downtrend Continues to Multi-Month Lows
USD/CNH made a fresh 5-month low today around 6.9180 as Chinese Yuan buyers drove the pair lower. Market talk is that the Bank of China is standing back and not actively intervening in propping the Chinese Yuan up ahead of next week’s signing of phase one of the US-China trade deal. A recent article in the South China Morning Postposited that there may be clauses in next week’s deal that prohibit China from manipulating its currency. US President Trump has been very vocal about the effects of the weak Chinese Yuan on the US economy. Chinese Vice Premier Liu will lead the Chinese delegation to the US to sign the deal on January 15.
The daily USD/CNH chart shows the defined downtrend in the pair since the early September high just under 7.2000. A series of lower highs and lower lows continue, while USD/CNH is now under all three moving averages, another negative set-up. The chart shows a cluster of old highs and lows between mid-May and mid-June last year that may slow down any further sell-off with the medium-term target for the pair down just below 6.8200. The CCI indicator shows that USD/CNH is currently oversold, although not at the extreme levels seen in mid-December.
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USD/CNH Daily Price Chart (January 2019 - January 9, 2020)
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