The USDCNY Is Stuck Between Two Fibonacci Levels

Published on: 07/31/18 11:08 AM

Category: Uncategorised

The reigning United States trade wars have weakened the Chinese Yuan. A short term boost is expected from the US dollar if the expectations for the Q2 GDP are on target. The latest release of the DailyFX Q3 Forecasts are covering the entire range of asset classes. There was a small rebound in USDCNY expected to fall under pressure again due to the United States and European Union easing the fears of an no holds barred trade war yesterday. The two nations agreed to work as a team to attempt to resolve unfair trading practices.

The US and the EU have agreed to work together to achieve trade barriers encompassing non-auto goods and zero tariffs with the United States adding they would consider reducing the current tariffs on both aluminum and steel. If the trade barriers from the two giants cease, the discussions of a joint effort against trading practices deemed unfair may result in issues for China. The country would be under close scrutiny from two of their major trading counterparties. Although it is not official, the growth in China appears to be decreasing.

The rate for the current United States dollar and the offshore Chinese Yuan is frozen between the Fibonacci levels of 6.6990 and 6.8250. This was caused by the heavy sell off of Yuan. The CNH has weakened and is acting as a counter balance between the current trade tariffs of the United States. If the United States continues with their targeting of $500 billion of Chinese services and goods it may cause further weakness. United States President Donald Trump is still annoyed regarding the CNH weakness level. This is distorting trade in favor of China. With the European Union apparently on the same page as the United States, China may be feeling empowered. It remains likely the USDCNY will remain frozen for the short term between the two Fibonacci levels. Resistance will return if the retaliation and actions between the United States and China continue to escalate.

The investors will have a high interest in the US Q2 GDP figures on Friday. The current expectations are high at 4.3 percent. According to the current market rumor, POTUS has been discussing an extremely strong number underpinning the Untied States dollar despite the fact the chart appears weak for the short term. This is just a rumor. If the expectations for a 4.5% to 5% print are reached, it may be possible for the United States dollar to exceed the twenty and fifty day moving averages. This is currently at 94.05 and 94.15.