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There has been a clear and important shift in US monetary policy with the Fed rhetoric turning increasingly hawkish. The shift has triggered a rebound in the USD. Subsequently, economists at Danske Bank forecast a little stronger USD/CNY over the coming months.

EUR/CNY seen at 7.70 on a 12-month view

“The shift in Fed rhetoric in our view marks the turning point for the USD and we see the turnaround in USD/CNY materializing over the next 6-12 months.”  

“We have lifted the 1M and 3M forecast slightly to 6.45 (from 6.40) and 6.50 (from 6.45) but still see the cross at 6.60 and 6.70 on 6M and 12M, respectively.”

“We look for EUR/CNY to stay around 7.70 on 12M but with some downside risk. The main risk is USD/CNY rising stronger than we forecast and EUR/CNY falling more.”