USD/CNH: Bearish Run Shows no Signs of Stopping Yet

USD/CNH has dropped 1.4% so far in October and is on track for a fifth straight monthly decline.

China

USD/CNH has dropped 1.4% so far in October and is on track for a fifth straight monthly decline. The strength in Chinese yuan is reinforced by the contrast in coronavirus situation in China and the rest of the world. While the Chinese economic activity is gradually returning to normal, there is a resurgence of new Covid-19 cases in Europe and the US, and some European countries are reimposing lockdowns.

Meanwhile, China's official PMIs for October will be released on Saturday (October 31), which are expected to be broadly unchanged at recent high. Caixin China Manufacturing PMI will be reported next Monday (November 2), which is expected to be down slightly to 52.8.

From a technical point of view, USD/CNH is extending its bearish run as shown on the daily chart. Previously, it has formed a double-top pattern, with the neckline broken. The level at 6.8500 maybe consider as the nearest resistance, while the 1st and 2nd support are expected to be located at 6.6300 and 6.4900.


Source: Gain Capital, TradingView

More from CNY

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.