A strong dollar drives up exchange rates

Winkelmann

Forex

Summary:

With the return of a strong US dollar, there is a possibility that USDCNH will gradually rise and catch up.

BUY USDCNH

Close Time

CLOSED

6.80043

Entry Price

6.84200

6.78000

6.70327 -0.00252 -0.04%

204.3

Pips

Loss

6.78000

Exit Price

6.80043

Entry Price

6.84200

Fundamentals

Recently, as the US dollar has continued to strengthen, non-US currencies have fallen significantly. In contrast, the RMB has remained very strong and maintained an appreciation trend because the Chinese economy is generally stable and improving.

However, with half of 2026 already passed, the US dollar index, which had fallen to a low of 95.5 at the beginning of the year, ultimately closed above 101 on the last trading day of the first half, accumulating a gain of nearly 3% so far this year. This is mainly due to the strong performance of the US economy. Inflation concerns triggered by the Middle East conflict strengthened market expectations that the Federal Reserve might further raise interest rates. In his debut in June, the new Federal Reserve Chairman Kevin Warsh displayed a hawkish stance, completely shattering the market's "interest rate cut dream".

Currently, US inflation data remains well above the 2% target, and the market expects that the employment data later this week will further strengthen expectations of a Fed rate hike. A strong dollar has returned, and there is a possibility that the USD/CNH exchange rate will gradually rise and catch up.

Technical aspects

A strong dollar drives up exchange rates_1

Looking at the monthly chart, the RMB has appreciated significantly over the past year, with USDCNH falling to around 6.75, the monthly support level. It then rebounded to above 6.80 in June, which may reverse the continuous decline in the short term.

A strong dollar drives up exchange rates_2

From the daily chart, USDCNH has stabilized and rebounded, showing a head and shoulders bottom pattern. After a short-term pullback to the neckline, it has stabilized and risen again, and the possibility of further gains cannot be ruled out.

In terms of trading strategy, consider buying on dips. Enter a long position around 6.80, with the first target around 6.842 and the second target around 6.920. Set a stop-loss order above 6.786.

Trading advice

Trading direction: Long

Entry fee: 6,800

Target price: 6.842

Stop-loss level: 6.780

Downside support levels: 6.786/6.776

Upward resistance levels: 6.842/6.818

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