The U.S. dollar against the Chinese yuan has been trading in a sideways range between 7.2100 and 7.3100 over the past month, searching for a clear direction either upwards or downwards. It has declined by approximately 1% since the beginning of the year.
The Hang Seng Index reached 24,670 points on March 7, 2025, marking its highest level in three years. It has risen by around 20% since the start of the year, outperforming U.S., European, and Japanese stock indices. Additionally, the Hang Seng Tech Index has surged 31% year-to-date, outpacing the Nasdaq 100 Index and specifically the Magnificent Seven stocks.
Recently, there has been a noticeable recovery in consumer spending in China, as indicated by:
- Retail sales increased by 0.4% year-on-year in February, exceeding expectations (3.8%) and the previous reading (3.7%).
- Industrial production grew by 5.9% year-on-year in February, surpassing analysts’ expectations of 5.3%.
- Fixed asset investment rose by 4.1% year-on-year in February, outperforming both the forecast and the previous reading (3.2%).
Investors are closely monitoring the ongoing trade war between the United States and China, along with the reciprocal tariffs imposed by both sides. This situation creates uncertainty, market volatility, and intense competition, particularly in technology and artificial intelligence sectors.
Technical analysis: bearish pressure on USD/CNY
Technical indicators suggest that the U.S. dollar against the Chinese yuan may face further downward pressure due to:
- Bearish crossover: A bearish crossover occurred on February 6, 2025, between the 20-day moving average (gray) at 7.2554 and the 50-day moving average (blue) at 7.2826.
- Relative Strength Index (RSI): Currently at 43 points, indicating bearish momentum for USD/CNY.
- MACD Indicator: The blue MACD line is below the orange signal line, remaining in negative territory, signaling further bearish momentum for the pair.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
