Talking Points:
- USD/CNH surged to the 6.7 handle after 6.6500 held on a retest
- Clear break and a hold above 6.7 might be required for further bullish conviction
- A short term hold above 6.6860 might be indicative of a tentative breakout attempt
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The US Dollar is nudging lower versus the Chinese Yuan in offshore trade, after the pair surged to the 6.7 resistance level following the Yellen speech this past Friday.
Indeed, after the index held the 6.6500 level on a retest, is seemed likely that focus will shift to 6.6860 followed shortly by the 6.7 figure.
At this stage, the pair is having difficulties cracking the level, and further upside conviction might require a clear break and a hold above, potentially exposing the January high at 6.7584.
A higher hold than 6.6500 might suggest further attempts at a break down the line. This seems likely to shift focus to two potential intermediate support levels: 6.6860 and 6.6750.
If the pair manages to hold above one of those levels, further breakout attempts appear likely.
With that said, stronger conviction to the downside may target the 6.6500 level again, followed by the July lows at 6.6224.
USD/CNH Daily Chart: August 29, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
Follow him on Twitter at @OdedShimoni
