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USD/CNH Technical Analysis: Trying to Extend Weekly Uptrend
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Talking Points:
USD/CNH Technical Strategy: Flat
US Dollar tries to extend recovery after prices bounced from weekly support
Fundamental instability still clouds outlook, argues against Yuan exposure
The US Dollar is attempting to build upside momentum against the Chinese Yuan in offshore trade after pushing off support guiding price higher over the past week. Positioning is inconclusive however and gains may yet prove to be corrective in the context of a larger down move from the late-March swing high.
A daily close above the 38.2% Fibonacci retracement at 6.4845 opens the door for a test of the 50% level at 6.4931. Alternatively, a reversal below the 23.6% Fib expansion at 6.4767, a level bolstered by trend line support, paves the way for a challenge of the 38.2% threshold at 6.4662.
We continue to see it as imprudent to commit to CNH exposure against a backdrop of fundamental instability amid a tug of war between Chinese officials and markets participants. With that in mind, we remain on the sidelines for the time being.
Where are financial markets heading in the second quarter? See our forecast here!
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