FxWirePro: USD/ CNY hits 3-year low, scope for further downside

• USD/CNY hit a three-year low on Tuesday as the yuan strengthened, supported by strong forex inflows following China’s record current account surplus in the fourth quarter..

•  Monthly net forex inflows via Chinese banks totaled $79.9 billion in January, the third largest in history, according to official forex settlement data. It followed record inflows in December.

• Meanwhile, preliminary data shows China's current account surplus hit a record high in the fourth quarter, thanks to strong exports as shippers diversified into non-U.S. markets..

• The yuan   firmed roughly 0.1% to 6.894 per dollar in early trading, having hit the strongest level since May 2023.

•  Immediate resistance is located at 6.908 (Daily high), any close above will push the pair towards 6.922(SMA 20).

• Support is seen at 6.839(23.6%fib) and break below could take the pair towards 6.885 (Lower BB).

Recommendation: Good to sell  around 6.895  with stop loss of 6.920 and target price of 6.860