FxWirePro: USD/CNY firms slightly, but downward resumption looks likely

• USD/CNY edged higher on Tuesday as the yuan weakened amid renewed attacks on energy infrastructure in the Middle East and Ukraine, reviving concerns over energy supplies.

• The PBOC fixed the yuan's midpoint rate at 6.7298 per dollar ahead of Tuesday's market opening, marking its strongest level since February 2, 2023, though the fixing was 317 pips weaker than the Reuters forecast.

  • The central bank has set its daily official yuan midpoint weaker than market forecasts for nearly a year, a policy traders and analysts view as an effort to curb the currency’s appreciation. The spot yuan is allowed to trade 2% on either side of the fixed midpoint each day.

•The yuan is expected to trade within a narrow range in the near term as investors await clearer signals on the Federal Reserve’s interest rate outlook ahead of the U.S. midterm elections.

•  Immediate resistance is located at 6.703(SMA20), any close above will push the pair towards 6.711(38.2%fib)

• Support is seen at 6.691(23.6%fib) and break below could take the pair towards 6.687 (Lower BB)

Recommendation: Good to sell around 6.700, with stop loss of 6.720 and target price of 6.680