A downtrend has formed on USD/CNH since it failed to retest the 2022 high in September. Since then, a lower high, aggressive selloff and a bearish continuation pattern (rising wedge) has formed on the daily chart. The rising wedge projects a downside target towards the cycle lows ~7.1.

If the yuan continues to depreciated (lower USD/CNH), it could prompt other Asian currencies such as the Japanese yen to also depreciate, in order to remain competitive with trade. And as USD/JPY is approaching 152 - a level it failed to test due to BOJ intervention (and subsequent concerns of another intervention) - there's a reasonable chance that USD/JPY may struggle to break above 152.

For now, USD/CNH looks ripe for a move lower given the double top / rising wedge around the 50% retracement level, and bearish momentum picking up. Bears could have a stop above the cycle highs and target the lows around 7.1. But if the Fed begin to drop dovish clues further out, it could also break below 7.1 and head for 7.0.
CNHDouble Top or BottomForexTrend AnalysisUSDCNHusdcnhanalysisusdcnhideaUSDJPYWedgeyenyuan

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