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Fundamentals

During the Asian session on Wednesday (June 14), the central parity of USDCNH was reported at around 7.1566, down 68 basis points from the previous value. The CNH exchange rate continued to fluctuate within a narrow range and is currently trading around 7.1705. Yesterday, the U.S. Dollar Index (USDX) weakened sharply. In two trading days, the USDX fell by 45 points, that is, the USD depreciated by 0.43% against non-USD currencies, nearly 0.5%, to 103.20. However, it failed to save the weak CNH, and the highest depreciation of USDCNH reached a high of 7.1783, mainly due to the continued economic downturn in China.

Data: The data shows that the annual rate of CPI in the U.S. in May was 4%, the expected value was 4.1%, and the previous value was 4.9%. In China, the annual M2 money supply rate in May was 11.6%, with the expected value of 12.1% and the previous value of 12.4%. In China, the new CNY loan in May was 1.36 trillion, with an expected value of 1.6 trillion and the previous value of 718.8 billion. The scale of social financing in China in May was CNY1,560 billion, with an expected value of 2,000 billion and a previous value of 1,217.1 billion.

Overall: The CPI of the U.S. released last night fell further than expected, which was also the 11th consecutive month. In May, the consumer price index of the U.S. fell further. The market expects the Federal Reserve to keep interest rates unchanged tonight. Although the U.S. policy interest rate will remain high for a long time, it is only a matter of time before the USD weakens. On the CNH side, it is not optimistic. The PMI has been below 50 for two months in a row, and the economic pressure is also prominent. However, the People's Bank of China began to cut interest rates on June 13, and investors are also expecting more policies, which may give some support to the CNH, and the effect remains to be seen. Perhaps the CNH can stand firm in the short term.

Technical Analysis

In the 1D timeframe, USDCNH is still in the rising channel, with a slope of 30-45, and its shape is relatively intact. The exchange rate price has also been above the 5th, 10th, and 20th, and the bullish trend is obvious. The shortcoming is that the MACD indicator has entered the overbought zone, so it is necessary to be alert to the risk of short-term retracement from an impulse high. The initial resistance at the top is 7.18, and the further resistance is 7.20. If it can be successfully broken, the strong resistance at the top is near the previous high of 7.37. The initial support below is around 7.10, and the further strong resistance is at the integer threshold of 7.0.

Today's Recommendations: it is recommended not to go long during the uptrend and take the chance to go short with small positions around 7.17, with a stop loss at 7.18 and a first target at 7.10 for part of the taking profit. The remaining positions are set for a breakeven of taking profit, with a second target at 7.02.

Trading Recommendations

Trading direction: Short

Entry price: 7.1700

Target price: 7.1000

Stop loss: 7.20000

Support: 7.1000, 7.0000

Resistance: 7.1800, 7.2000