In May, the USD/CNY pair fell to its lowest level in approximately three years. In June, USD/CNY is forecast to continue its fall, as reported by Mizuho Bank.
Expected strength of the Chinese yuan
“The appreciation of the Chinese yuan is expected to continue until USD/CNY hits a low. The pair rapidly fell below the 6.40 level, falling below the CNY 6.37 level – the support zone from the viewpoint of technical analysis. The next psychological turning points would be 6.35 and 6.30.”
“Market participants should also carefully observe the market to see if the trend will be reversed by the decision to raise the foreign currency reserve deposit requirement ratio. Once the exchange rate hits the low, the trend could become inverted, and the pair could start rising, of which market participants should remain attentive. However, from a long-term perspective, the Chinese yuan is still forecast to appreciate against the US dollar.”
“Chinese Vice Premier Liu He and US Trade Representative Katherine Tai held trade talks on May 27. They agreed to continue trade negotiations, which also supported the appreciation of the Chinese yuan. Yet, market participants should remain attentive of future headlines related to trade negotiations between the US and China.”
Share
