OCBC strategists view recent yuan depreciation as a correction, not a trend reversal, despite near-term dollar strength pressures.
The Chinese yuan’s decline against the dollar has stalled, with USD/CNH trading near 6.8020 after a recent rally. Daily bullish momentum remains intact, though the relative strength index (RSI) shows signs of easing from overbought levels, suggesting a potential pullback.
Resistance is pegged at 6.8260, while support levels sit at 6.80 and 6.7750. Analysts caution that the yuan may stay under pressure in the near term if dollar strength persists, particularly into quarter-end. However, they maintain that recent weakness is corrective rather than indicative of a broader depreciation trend.
The yuan’s slippage follows broader dollar strength driven by hawkish Federal Reserve rhetoric and softer risk sentiment. Strategists expect measured weakness unless the daily fixing signals a more sustained depreciation bias.