Market Analysis: Yuan Retreats from Multi-year Highs on Strong Economic Data

FXOpen

The US dollar index hit its highest level since early March this week, but the yuan is one of the few currencies to rise against the USD over the period.

This was facilitated, among other things, by strong economic data published today:
→ Industrial production growth in August amounted to +4.5% in annual terms (expected +3.9). This is the strongest progress in 1 month since autumn 2022.
→ Retail sales in August increased by 4.6% year on year (expected +3.0%).

The chart shows that after a multi-year high (B) of about USD 7.36 per yuan set on September 8, the rate has retreated sharply. That is, sales of dollars (B→C) for yuan increased. And the sharp increase in A→B is completely leveled out. This is a bearish sign, indicating that the bulls have completely retreated.

Now the price is near the median line of the channel. Here one can expect support, which is also strengthened by the level of 7.275, which previously served as resistance.

Let’s say that if a rebound C→D occurs (its probability is indicated by the long lower shadows on the candles on September 14-15), then by its dynamics it will be possible to judge the sustainability of the initiative that the bears have taken. If the rebound is 50% of the momentum (B→C), this will confirm the change in sentiment to bearish, and then we can expect that sellers will be able to put pressure on the rate so that it will decline to the lower border of the channel.

And then the picture will be even more bearish, because a head-and-shoulders pattern will form on the chart along the 0-B-D vertices. Provided the positive news background regarding the Chinese economy continues, we will be able to witness the formation of a stable bearish trend in favor of the yuan.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Forex Analysis

SNB Unexpectedly Lowers Interest Rate from 1.50% to 1.25% GBP Awaits Bank of England Verdict: Volatility Ahead? Market Analysis: AUD/USD and NZD/USD Sight Steady Increase European Currencies Adjust to Support Levels: Is Growth Possible? NZD/USD Exchange Rate Falls from Nearly 5-Month High

Latest articles

Weekly Market Wrap With Gary Thomson: Nasdaq 100 Index, GBP, SNB Interest rate, Brent Crude Oil
Financial Market News

Weekly Market Wrap With Gary Thomson: Nasdaq 100 Index, GBP, SNB Interest rate, Brent Crude Oil

Get the latest scoop on the week's hottest headlines, all in one convenient video. Join Gary Thomson, the COO of FXOpen UK, as he breaks down the most significant news reports and shares his expert insights.

  • Nasdaq 100 Index Reaches
Analytical META Stock Predictions for 2024, 2025-2030, and Beyond
Trader’s Tools

Analytical META Stock Predictions for 2024, 2025-2030, and Beyond

Meta Platforms, Inc., formerly known as Facebook, is a leading technology company renowned for its social media and virtual reality innovations. This article provides a detailed analysis of Meta's stock performance, future analytical projections for 2024 to 2030, and the

Commodities

Natural Gas Price: Bullish Trend Weakens

Forecasts of a hotter summer, published during April and May, led to a sustained bullish trend in the natural gas market, as this commodity is heavily used for air conditioning.

Specifically:
→ The XNG/USD chart indicates that from 1st April

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.