After strengthening to as high as 6.235 per USD in March, the yuan has declined steadily against the dollar, as the market participants dumped Chinese yuan in favor of the dollar amid intensifying trade war between the world’s two biggest economies. The yuan selloff really gathered pace over the past five weeks and the yuan has declined from 6.4 per USD to 6.756 per USD as of today.
Based on our latest calculations, we expect the yuan to weaken further just as we expect the trade war to intensify. We would like to urge our readers to long the yuan targeting 6.86 per USD. However, we expect the yuan to weaken beyond that and reach as low as 7 per USD.