USD/CNH Forecast Today - 19/07: USD Finds Support (Chart)
Date
7/19/2024 3:07:55 AM
(MENAFN- Daily Forex)
In my daily analysis of the Chinese yuan, I can see that the US dollar continues to hang around the 7.27 level, an area that obviously has been important multiple times. Furthermore, we also have the 50-Day EMA hanging about, offering a significant amount of support. At this point, the fact that every time we dip below the 7.27 level, it looks like the buyers are willing to step in and pick up the greenback.
Keep in mind that China is a bit of an opaque market, so also have to realize that the currency market can be a bit convoluted at times. In general, this is a market that I think will continue to be very noisy, especially as the Chinese yuan is not necessarily a free-floating currency, as the People's Bank of China is known to get involved from time to time and of course sets a reference rate.
At this point in time, I think this is a good measure on risk appetite, and if the US dollar starts to take off against the Chinese yuan again, that would of course be a very“risk off” signal. On a break to the upside, we could see this pair go looking to the 7.30 level above, followed by the 7.32 level. At that point in time, we would probably see the US dollar strengthening against most other things as well.
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On the other hand
On the other hand, we could see a market turnaround ahead, dropping below the 7.26 level. This would strengthen the Chinese yuan, which could cause some issues and China itself, because as you know the Chinese market is a major export economy. They need cheap products to be sold in the west in order to finance massive amounts of debts.
If we do break down from here, we could see the US dollar really fall apart against other currencies, and you may get more“real estate covered” in other pairs such as the New Zealand dollar, Australian dollar, and other highflying commodity currencies. Either way, this looks like a market that is very well contained in a small area, but it does look like we could have a short term rally ahead.
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