USD/CNH Price Analysis – Chinese Yuan Slump Continues as Coronavirus Fears Escalate
CHINESE YUAN (CNH) ANALYSIS
USD/CNH RALLIES FURTHER AS CORONAVIRUS SPREADS
The city of Wuhan in China – population 11 million – is in lockdown and at least 17 people have died in China as the deadly Coronavirus continues to spread. There have been reported outbreaks in Japan, South Korea, Thailand as well as in the US and Australia over the last few days with more than 570 people now infected with the pneumonia-like virus. It remains to be seen if the World Health Organization (WHO) declares the outbreak a global emergency, an action that would likely put more pressure on the Chinese Yuan.
The USD/CNH rate has reversed its recent downtrend sharply on the news coming out of China and is now trading back at levels last seen around two weeks ago. The pair has been trending lower ever since they traded at a peak of just under 7.20 at the start of September 2019 as investors began to price in the news of the recently agreed phase one trade deal between the two economic superpowers.
The daily USD/CNH chart remains in a downtrend with a series on lower highs and lower lows in place since September. The recent uptick has seen the pair trade above the 20-day moving average today for the first time since early December and a close above here may indicate further upside in the short-term. On the upside, there are a range of recent highs and lows between 6.950 and 7.010 with the closely watched 7.00 big figure another potential barrier for bulls to contend with. As long as the lower highs and lower lows remain in place, USD/CNH may reverse lower in the medium- to longer-term, absent any further Coronavirus escalation.
USD/CNH DAILY PRICE CHART (APRIL 2019 – JANUARY 23, 2020)
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First published by DailyFX.