EUR/CNY: Next targets on the upside align at 7.77 and at 7.85 – SocGen

Economists at Société Générale analyze EUR/CNY technical outlook.

7.65/7.64 should now be an important support near term

The PBoC earlier today cut the 7d reverse repo rate by 10 bps to 1.9%, a move that cements a similar 10bp cut in the 1y MLF rate (this Thursday?) and the loan prime rates (next Tuesday?). The policy easing keeps USD/CNY on track for 7.20 and EUR/CNY for 7.80.

EUR/CNY uptrend has resumed after breakout above the upper limit of the rectangle within which it evolved since April. 

Daily MACD is anchored within positive territory denoting persistence in upward momentum. 

Next potential objectives are located at 7.77 and a multi-month ascending channel at 7.85. 

The upper end of previous consolidation near 7.65/7.64 should now be an important support near term.