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USD/CNH Technical Analysis: Yuan Hits Three-Month High

USD/CNH Technical Analysis: Yuan Hits Three-Month High

Ilya Spivak,

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Talking Points:

  • USD/CNH Technical Strategy: Flat
  • US Dollar resumes decline, drops to lowest level in three months vs. Yuan
  • Staying on the sidelines, opting to avoid unstable fundamental backdrop

The US Dollar came under renewed selling pressure after a brief period of consolidation, dropping to the lowest level in three months against the Chinese Yuan in offshore trade. A break below chart support hints continued losses are likely ahead.

From here, a push below the 38.2% Fibonacci expansion at 6.4547 paves the way for a challenge of the 50% level at 6.4225. Alternatively, a reversal back above the 23.6% Fib at 6.4945 sees the next upside barrier at 6.5190, the 14.6% expansion.

We continue to see it as imprudent to commit to CNH exposure against a backdrop of fundamental instability as the tug of war between Chinese officials and the markets continues.With that in mind, we remain on the sidelines for the time being.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.