USD/CNH traded higher but moderated after CNY adjustment. The pair was last at 7.2236, note OCBC FX analysts Frances Cheung and Christopher Wong.
Bullish momentum on daily chart intact
“The CNY’s adjustment was much stronger than expected this morning, ‘conveying’ a message that the recent USD/CNH move may be coming close to testing policymakers’ tolerance threshold for CNH weakness.” “On the one hand, it may serve as a deterrent against further weakening of the RMB, but on the other, Trump’s trade push may mean that USD/CNH remains better bid on dips.”
“Given a strong USD trend, policymakers can only slow down the pace of RMB depreciation at best. For USD/CNH to reverse the trend, the USD needs to moderate.”
“Bullish momentum on the daily chart remains intact as the RSI is near overbought conditions. Resistance at 7.25, 7.2750 levels. Support at 7.22, 7.20 (200 DMA).”
Source: Fx Street
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