FxWirePro: USD/CNH to range trade 6.71-6.53 band as bulls & bears fight to take control

Since topping around 6.43 per dollar in September, Chinese yuan has weakened. However, despite several attempts since then, yuan bears have so far failed to push the yuan beyond 6.7 per dollar. The very last attempt failed in late October with yuan strengthening to 6.58 per USD. In the last attempt, earlier this month, Yuan bears failed again around 6.66 per USD, with yuan strengthening to 6.626 per USD as of today.

Our calculations at FxWirePro suggests both bears and bulls are fighting to gain control over the pair with no one succeeding to defeat the other group. As the tug of war continues we expect the yuan to consolidate in a range of 6.53-6.71 unless one group gets the upper hand.

While higher domestic interest rates and improvement in the economy working in favor of the yuan, steady rise in U.S. interest rates thanks to hiking by the U.S. Federal Reserve and Trump administration’s tough stance against trade imbalance with China is exerting a downside pressure on the yuan.

We highly recommend close monitoring of the pair. Our long-term bias remains to the downside for yuan and to the upside for the USD/CNH pair.

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