- The USD/CNH pair is under pressure, having dived out of the uptrend on Tuesday.
- The pair hit a five-day low of 6.8056. The relief could be short-lived, courtesy of escalating trade tensions.
The Chinese yuan is showing signs of life.
The USD/CNH pair (offshore yuan exchange rate) is printed a five-day low of 6.8056 earlier today and was last seen trading 6.8465.
The currency pair pierced the ascending trendline (drawn from the June 14 low and July 10 low) yesterday as the PBOC reintroduced FX forwards reserve ratio on Monday to stall the decline in the yuan.
So, the technical correction seems to be gathering pace. However, the pullback could be short-lived as the Sino-US trade tensions continue to rise.
The US will begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23, having imposed tariffs on $34 billion in goods last month.
As a result, the PBOC would want to keep the yuan on a slow declining trend as a weaker currency would help the Chinese economy absorb shocks from the trade war with the US.
USD/CNH Technical Levels
Key support: 6.80 (psychological level), 6.7738 (July 31 low), 6.7380 (July 26 low)
Key resistance: 6.8320 (10-day moving average), 6.8758 (previous day's high), 6.9124 (August 3 high)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD steadies above 1.0600, awaits German ZEW and Powell speech
EUR/USD is holding above 1.0600 in the European morning on Tuesday, having hit fresh five-month lows. The pair draws support from sluggish US Treasury bond yields but the rebound appears capped amid a stronger US Dollar and risk-aversion. Germany's ZEW survey and Powell awaited.
GBP/USD stays below 1.2450 after UK employment data
GBP/USD trades marginally lower on the day below 1.2450 in the early European session on Tuesday. The data from the UK showed that the ILO Unemployment Rate in February rose to 4.2% from 4%, weighing on Pound Sterling.
Will Gold reclaim $2,400 ahead of Powell speech?
Gold price consolidates the rebound below $2,400 amid risk-aversion. Dollar gains on strong US Retail Sales data despite easing Middle East tensions. Bullish potential for Gold price still intact on favorable four-hour technical setup.
SOL primed for a breakout as it completes a rounding bottom pattern
Solana price has conformed to the broader market crash, following in the steps of Bitcoin price that remains in the red below the $65,000 threshold. For SOL, however, the sensational altcoin could have a big move in store.
Key economic and earnings releases to watch
The market’s focus may be on geopolitical issues at the start of this week, but there is a large amount of economic data and more earnings releases to digest in the coming days.