USD/CNH: 2-way trades likely – OCBC

USD/CNY fix continues to come in slightly softer (and below spot) for the whole week, last seen trading at 7.2057 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Mild bearish momentum on daily chart intact

"This morning fix was set at 7.1938 (vs. 7.1963 yesterday). We believe policymakers are likely to still adopt a measured approach to appreciation (if any) like how they took a measured approach when USD/RMB was trading higher previously. Maintaining RMB stability is a key objective for policymakers."

"Any sharp RMB appreciation may trigger exporters rushing to sell their USD holdings and that cycle (if it happens) may result in excessive RMB strength and volatility, which is not desirable for policymakers at this point. USD/CNH continued to trade in subdued range."

"Mild bearish momentum on daily chart intact while RSI was flat. 2-way trades likely. Support at 7.18 before 7.1475 (61.8% fibo retracement of 2024 low to 2025 high). Resistance at 7.2200/30 (200 DMA), 7.25 levels."