The US dollar continues to rally against the Chinese Yuan, grinding higher and above the 7.00 CNH level. The market has recently seen the 200 day EMA level as support and bounce quite nicely from there. By doing so, we have attacked the 50 day EMA, but have not broken above it yet. If we can close above there on a daily chart, then it becomes a very bullish sign. Overall, that could send the market looking towards the 7.15 CNH level, but it’s going to take some time to get there.
Keep in mind that this pair is essentially “Ground Zero” when it comes to the US/China trade war, and as a result it will go up and down based upon whether or not there is some type of an agreement. This pair will literally go back and forth based upon whether or not people feel good about the deal or not. Recently, there has been a bit of a grind higher, and that suggest that perhaps people are a bit cautious and therefore buying the US dollar. Despite what some politicians in the United States will tell you, the Chinese do not want the currency pair to go too much higher, because most of their debt is denominated in US dollars. In other words, the higher this market goes, the more dangerous their debt becomes. As it rises, it is a sign that people are becoming more and more concerned, and if you do not trade this market, it should be thought of as a barometer on risk appetite. If this pair rises, quite often it means trouble in other risky assets around the world. This is something that unfortunately retail traders don’t pay much attention to, so it gives you a bit of a “leg up” on how the world is feeling about this US/China situation. That being said, it does make a nice longer-term market, and closing above that 50 day EMA, offers a significant move higher.
Keep in mind that this pair is essentially “Ground Zero” when it comes to the US/China trade war, and as a result it will go up and down based upon whether or not there is some type of an agreement. This pair will literally go back and forth based upon whether or not people feel good about the deal or not. Recently, there has been a bit of a grind higher, and that suggest that perhaps people are a bit cautious and therefore buying the US dollar. Despite what some politicians in the United States will tell you, the Chinese do not want the currency pair to go too much higher, because most of their debt is denominated in US dollars. In other words, the higher this market goes, the more dangerous their debt becomes. As it rises, it is a sign that people are becoming more and more concerned, and if you do not trade this market, it should be thought of as a barometer on risk appetite. If this pair rises, quite often it means trouble in other risky assets around the world. This is something that unfortunately retail traders don’t pay much attention to, so it gives you a bit of a “leg up” on how the world is feeling about this US/China situation. That being said, it does make a nice longer-term market, and closing above that 50 day EMA, offers a significant move higher.