- USD/CNH fails to hold on to the bounce from six week low amid rising optimism surrounding the US-China trade deal.
- PBOC’s Yuan reference rate announcement seems to have pleased sellers.
- FOMC, US jobs report and month-start PMIs will be crucial to follow.
With the increasing odds of a successful trade deal between the United States (US) and China, USD/CNH pulls back to 7.0565 amid the initial Asian session on Tuesday.
Joining the weekend’s trade-positive comments, the US President Donald Trump recently said that they are “ahead of the schedule” as far as preparations for Chile talks are concerned. Also magnifying the optimism is the announcement from the US Trade Representative’s (USTR) office that indicates additional relief to Chinese exporters.
It should also be noted that the lowest Yuan reference rate by the People’s Bank of China (PBOC) since August 26, at 7.0617 versus Monday’s 7.0762, might have recently defied the pair’s U-turn from the six week low.
The pair traders mostly ignored the recent US Dollar (USD) strength as doubts over the President's impeachment grew stronger with the House up for voting on further investigation.
Moving on, monetary policy meeting by the Federal Open Market Committee (FOMC), monthly employment data from the US and China’s month-start activity numbers, namely the Purchasing Manager Index (PMI), will be the key to follow during the week.
While a horizontal area comprising lows marked since mid-August, around 7.0300, seems to limit near-term declines of the pair, a 200-day EMA level of 6.9510 will be the next to please bears. Should prices rally beyond 50-day Exponential Moving Average (EMA) level of 7.0800 on daily closing basis, October 16 high near 7.1127 and monthly top close to 7.1700 will come back on the charts.
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