Chinese Yuan: Weakness against US Dollar seen as corrective – OCBC

OCBC’s FX strategists Sim Moh Siong and Christopher Wong note USD/CNH’s recent run-up has stalled, with the pair around 6.8020 and daily bullish momentum intact but RSI turning lower from overbought. They caution CNH may still trade on the back foot near term if Dollar strength persists, yet view recent Renminbi (RMB) slippage as a correction, expecting weakness to remain measured unless the fixing signals broader depreciation.

Momentum stalls near resistance

"The recent run-up in USD/CNH slowed overnight, tracking moves in the USD. Pair was last at 6.8020 levels."

"Bullish momentum on daily chart intact but RSI shows tentative signs of turning lower from near overbought conditions. We continue to watch for signs of turnaround."

"Resistance at 6.8260 (38.2% fibo). Support at 6.80 (50 DMA, 23.6% fibo retracement of 2026 high to low), 6.7750 (21 DMA)."

"We reiterate our caution that CNH may still trade on the back foot in the near term (possibly into quarter-end) if USD bullish momentum persists. We believe it may be too early to concur that the RMB appreciation trend has broken and still treat the recent slippage as a correction, after an extended run of measured appreciation."

"The slippage in CNH was due to the broader USD strength, owing to the recent hawkish Fed rhetoric, and softer risk sentiment (due to sell-off in AI and tech-linked equities). We reckon CNH weakness to remain measured unless the fix starts to validate a broader weakening bias."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)