Societe Generale strategists observe that USD/CNH has resumed its decline after repeated failures at the 50-DMA, which has capped rebounds since last year. The move is seen as stretched but still lacking signs of a meaningful rebound, with downside objectives around 6.77 and the 2023 trough at 6.69, while 6.81–6.85 are flagged as near-term hurdles.

Downside objectives and nearby hurdles

"USD/CNH has resumed its decline after failing to establish itself above the 50-DMA, which has capped rebounds since last year."

"The downward move is somewhat stretched; however, signals of a meaningful rebound are not yet visible."

"The next objectives could be located at projections of 6.77 and the 2023 trough of 6.69."

"Presidential discussions between the US and China over the next 48 hours are sideshow to the war but high-level engagement on trade and technology (Board of Trade has been touted for non-sensitive goods) is relevant at the margin and can help instill confidence in constructive dialogue and trade relations."

"The decline in USD/CNY to a 3-year low of 6.7861 highlights the tolerance of the PBoC to yuan appreciation and reflects optimism of lower trade tensions and the country’s BoP surplus."

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