USD/CNH defends crucial trendline support on heightened trade tensions

• The offshore yuan (CNH) is under pressure as US Vice President on Saturday vowed no end to tariffs until China bows.
• The USD/CNH bounced off the trendline connecting the Aug. 27 and Sept. 21 lows, saving the day for the bulls.

The offshore yuan (CNH) is reporting losses at press time, courtesy of heightened US-China trade tensions.

As of writing, the USD/CNH pair is trading at 6.9279, having defended the trendline rising from the Aug. 27 low.

The US Vice President Mike Pence said on Saturday that the Trump administration will not back down from its trade dispute with China, and might even double its tariffs unless Beijing bows to the US demands.

The harshly worded speech at an Asia Pacific Economic Co-operation (APEC) summit in Papua New Guinea, has likely triggered risk aversion in the markets. This is evident from the 0.35 percent drop in the S&P 500 futures. That risk-off has likely put a haven bid under the greenback.

A bullish reversal, however, would be confirmed after the pair violates lower high pattern with a move above 6.9694 (Nov. 13 high). Meanwhile, a close below the ascending trendline would validate the bearish divergence of the 14-week relative strength index (RSI) and allow a deeper drop.

USD/CNH Technical Levels