Forex Market: EUR/CNY trading forecast for Monday

Friday’s trade saw EUR/CNY within the range of 7.7273-7.7974. The pair closed at 7.7374, losing 0.69% on a daily basis, while gaining 0.69% for the whole week.

Fundamental view

China

The surplus on Chinas balance of trade probably shrank to 41.000 billion USD during September, according to market expectations. In August the nation had a record high surplus at the amount of 49.83 billion USD, following a previous record figure of 47.30 billion USD in July. In August 2013 Chinese trade balance produced a surplus of 28.5 billion USD. Exports increased at an annualized rate of 9.4% to 208.5 billion USD in August, following a 14.5% increase in July. Shipments to the United States were up 11.4%, while exports to the European Union rose 12.1% in August. At the same time, total imports fell at a rate of 2.4% to 158.6 billion USD in August, after another 1.5% drop, registered in July.

The trade balance, as an indicator, measures the difference in value between a nation’s exported and imported goods and services during the reported period. It reflects the net export of goods and services, or one of the components to form country’s Gross Domestic Product. Generally, exports reflect economic growth, while imports indicate domestic demand. In case the trade balance surplus shrank less than anticipated, this would have a bullish effect on the yuan. The General Administration of Customs will release the official numbers at 2:00 GMT on Monday.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 7.7540. In case EUR/CNY manages to breach the first resistance level at 7.7808, it will probably continue up to test 7.8241. In case the second key resistance is broken, the pair will probably attempt to advance to 7.8509.

If EUR/CNY manages to breach the first key support at 7.7107, it will probably continue to slide and test 7.6839. With this second key support broken, the movement to the downside will probably continue to 7.6406.

The mid-Pivot levels for Monday are as follows: M1 – 7.6623, M2 – 7.6973, M3 – 7.7324, M4 – 7.7674, M5 – 7.8025, M6 – 7.8375.

In weekly terms, the central pivot point is at 7.7519. The three key resistance levels are as follows: R1 – 7.8295, R2 – 7.9215, R3 – 7.9991. The three key support levels are: S1 – 7.6599, S2 – 7.5823, S3 – 7.4903.