Offshore yuan rebounds as Trump’s election prospects decline
The offshore yuan appreciated, bouncing back from three consecutive days of decline. The USD/CNH pair saw a shift in sentiment, as it moved from recent highs to lower levels. This drop can be attributed to changing market expectations regarding Donald Trump’s political prospects. As his perceived chances of winning the U.S. presidency have adjusted, traders now see less likelihood of future tariffs on Chinese goods, leading to a reduction in trade war fears. On the technical side, the chart shows a sharp dip in the past few sessions, with the MACD reflecting the momentum shift downward. The moving averages (EMA 24, 24, 72) suggest a correction is underway, although the support level from earlier in the week may serve as a floor. For now, the USD/CNH remains under pressure, with traders likely to continue adjusting positions based on how the election results are perceived to turn out.
Read more to find out how will yuan trend.
Disclaimer:
For short-term traders, such a recovery of the Chinese yuan offers a window of opportunity, particularly for those betting on reduced trade tensions between the US and China. However, risks remain, with U.S. inflation data and key Chinese economic figures looming. Depending on the strength of these indicators, traders should keep risk management intact when executing trades.
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