- The USD/CNH resumes its downward trend due to the bearish feeling around the USD.
- The technical configuration favors bassists and supports the possibility of an additional depreciation movement.
- Any attempt at recovery could be seen as an opportunity for sale and remain limited by about 7,1800.
The USD/CNH torque attracts new sellers after the modest rebound of the previous day and touches a new minimum of the year, around the 7,1525 zone during Thursday’s Asian session. In addition, a bearish technical configuration supports the possibility of greater short -term depreciation for cash prices.
The recent rupture below a simple mobile average (SMA), technically significant, was seen as a new trigger for USD/CHF bassists. In addition, the occurrence of a crossing of death in the daily chart (50 -day SMA crossing below the 200 -day SMA) and an intradic rupture below the horizontal support of 7,1715 add credibility to the negative perspective.
In addition, the oscillators in the daily chart are deeply maintained in negative territory and are still far from being in the overall area, which suggests that the road of lower resistance for the USD/CNH torque is still down. Therefore, a subsequent sliding towards the proof of the following relevant support, around the area of ​​7,1450-7.1445, seems like a different possibility.
On the other hand, recovery attempts could now face strong resistance near the horizontal support point of 7,1715. Any additional movement could be seen as a sale opportunity and runs the risk of fading near the maximum oscillation of the previous night, just before the 7,1800 mark. However, a sustained strength beyond the latter could pave the way for additional profits.
USD/CNH daily graphics
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
