From a high of 7.96 in early March, EUR/CNH has since fallen about 3%, coupled with a loss of momentum as seen in lower highs in the cross. Analysts at ANZ Bank are bearish on the cross.
Key quotes
“The hit by COVID-19 in the EA is more severe and widespread than in mainland China. More importantly, the lack of a united fiscal response in the EA will weigh on the cross. But in China, there is more fiscal as well as monetary space to buttress the economy.”
“EUR/CNH will likely break successive support levels, to trade to as low as 7.00, a 9% fall in a year’s time. Even though it is hard to pinpoint where support will be eventually, the cross is a sell on rallies.”
“We see substantial downside risk in EUR/CNH, hence sellers of the cross need to be more vigilant in managing the risk. For buyers, immediate support is 7.50, to be followed by 7.40 in mid 2020, with further downside from thereon.”
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