Chinese yuan to suffer further sustained weakness – Credit Suisse
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The Chinese yuan has seen a significant deterioration since late April. Economists at Credit Suisse think the risk of a further sustained weakness in the CNY space is highly elevated.
“With medium-term MACD staying outright positive and showing no signs of tiring, we look for a break above the high from September at 7.2502 to put USD/CNY into a fresh upside territory and expose the 61.8% retracement of the 2005/14 downtrend and the trendline from late 2016 at 7.4220/7.4540. Whilst we would stay wary of another pause here, a sustained break higher would be seen to clear way to the 78.6% retracement at 7.7978/7.8000, where would have greater confidence of a ceiling.”
“With weekly MACD continuing to rise, we think EUR/CNY looks set for a deeper recovery, with next significant resistance above 7.0977 seen at the high from May at 7.2525 and then eventually at the 38.2% retracement at 7.3316, which we think is likely to act as firm cap for any additional upside.”
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