Since May, the euro against offshore Chinese yuan (EURCNH) has overall been showing a volatile downward pattern.

**Trend review.** After briefly rising above the 8.0 level in April, it fell back below this psychological threshold again on May 12 and continued to weaken. By the middle price on May 18, it had fallen to around 7.92, for a cumulative decline of about 6.3%. As of this afternoon, the price has remained around 7.91, continuing the bearish-dominated trend.

**Fundamentals and technicals.** From the data, in the eurozone the first-quarter GDP increased quarter-on-quarter by only 0.1%. The April composite PMI fell below the expansion/contraction line, but inflation rebounded sharply to 3.0%. The European Central Bank has kept policy unchanged at consecutive meetings, and even officials have warned that high oil prices could force a compelled rate hike. This “stagflation” dilemma creates structural pressure for the euro, rather than support. By contrast, with the renminbi having appreciated by more than 2.5% since the start of the year, and China’s April manufacturing PMI rising to 52.1 in the same period, this has put downward pressure on EURCNH. From the technical perspective, the exchange rate has continued to move below the moving-average system; the MACD death cross has widened, and it is now testing the 7.90 psychological support level.

**Outlook.** The short-term direction depends on three observation points: ① whether the eurozone PMI further weakens this week; ② the tone of the Federal Reserve meeting minutes on Thursday; and ③ whether the situation in the Middle East escalates again, triggering energy risk.
#TradFi交易分享挑战 $EURCNH