Dollar-yuan could continue up but breakout questionable

FX:USDCNH   U.S. Dollar/Chinese Yuan
USDCNH covered about half of last Friday’s spike on Monday and has continued to gain since. Volatility increased significantly since the end of last week, but it’s still unclear whether it’ll continue at similar levels or perhaps decline somewhat over the next few sessions. Either way, the uptrend is likely to remain active unless there’s a significant intervention by the PBoC or sentiment shifts notably.

The price is above all of the moving averages and in or very close to overbought based on Bollinger Bands and the slow stochastic. ¥7.30 seems to be an obvious medium-term target, being a round number and the area of mid-November 2023’s high. Beyond that, ¥7.35 is the area of the all-time high which probably won’t be broken for some time without a clear fundamental catalyst even if the uptrend continues.

There’s no very clear area of static support on this chart. ¥7.20 is a possibility based on the longest tails of last month’s periods, but it’s pretty vague. The 200 SMA might be an important dynamic support in the next few days, though. The focus next week is on Friday’s NFP after Chinese PMIs on Sunday and Monday.

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

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