USD/CNH Technical Analysis: Yuan Gains Most in a Month
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- USD/CNH Technical Strategy: Flat
- Yuan gains most in a month vs. US Dollar ahead of February US jobs data
- Risk/reward parameters, fundamental instability argue against taking a trade
The US Dollar is under pressure against the Chinese Yuan after suffering the largest daily decline in a month in offshore trade. The decline appeared to reflect broad-based USD weakness amid pre-positioning ahead of the much-anticipatedrelease of February’s US employment report.
From here, a daily close below the 14.6% Fibonacci expansion at 6.5190 opens the door for a test of the 23.6% level at 6.4945. Alternatively, a reversal above the February 29 high at 6.5589 paves the way for a challenge of the 38.2% Fib retracement at 6.5899.
Prices are too close to support to justify entering short from a risk/reward perspective. Furthermore, we remain leery of any CNH exposure as the tug of war between Beijing policymakers and the markets makes for an inherently unstable fundamental landscape. With that in mind, we will stand aside.
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