Chart of the day: More yuan weakness in store
In line with a whole raft of other currencies, the offshore yuan weakened last week against the US dollar, a move that is continuing. While unwelcome for some, many will see this as a useful economic policy tool in a world that is facing several global headwinds – many from across the sea. We predicted this rally two months ago and today’s question is whether the Fibonacci retracement resistance at 6.685 yuan will give way. We feel it is more likely to do so next month because the dollar is already slightly overbought on the relative strength index. However, because bullish momentum is strong and the rally has (seaworthy) “legs”, a rush to the record high of 6.751 is very possible.
Nicole Elliott is a technical analyst