USD/CNY: Renminbi is ahead of China and US news
The collapse of the renminbi continued this week ahead of major economic events in the US and China. the couple US dollar / Chinese yuan It rose to 7.15 on Tuesday, the highest level since November last year. The closely related USD/CNH pair rose to 7.1698. Overall, the Chinese yuan has fallen about 4% this year.
US inflation, Fed decision, China data
The renminbi has been trending sharply lower in recent months as hopes for a quick recovery from China have faded. The latest data showed that major parts of the economy, such as real estate and manufacturing, are struggling. In this article, I mentioned that China’s exports and imports have declined.
Therefore, traders will want to pay attention to the economic data coming out of China. On Thursday, the Census Bureau will publish the latest figures on industrial production, fixed-asset investment, and retail sales. Economists believe these numbers will show that the country’s growth deteriorated in May.
A weaker Chinese yuan isn’t entirely bad for the country’s economy. As the world’s largest exporter, the weakness of the RMB makes it easier for companies to do business. In the past, China has been accused of deliberately devaluing its currency.
Biggest forex news On Tuesday, US consumer inflation figures will be released. Economists polled by Reuters expected inflation in the country to decline slightly in May, supported by a strong dollar and lower oil prices.
These numbers are noteworthy as they come just hours before the Federal Reserve begins its two-day monetary policy meeting. At that meeting, analysts believe the committee will decide to leave interest rates and quantitative tightening unchanged.
A strong Fed is likely to push USD/CNY higher. On the other hand, if the Fed offers relatively moderate interest rates, it will push the pair much lower.
Technical analysis of the USD/CNY pair
The renminbi has been on a downward trend for the past few months. In the above chart, we can see that the USD/CNY pair managed to turn the major resistance at 7.0239 into a support level in May 2022. The pair’s upside is supported by the 50-day exponential moving average (EMA) as it is nearing the 78.6% retracement level. .
Therefore, the path of least resistance for CNY is lower, with the next level to watch at 7.20, the 78.2% retracement level. The initial support for the pair is 7.1.
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