- The pair gapped lower in Asia, possibly due to reports stating that US-China “agreement is taking shape”.
- The upward sloping 5-day MA is restricting the downside in the pair.
USD/CNH is currently trading at 6.7046, having sought the support of the ascending 5-day moving average (MA) of 6.6958 earlier today.
The pair gapped lower at 6.6696 (Vs Fri’s close of 6.7096) on trade optimism.
Wall Street Journal (WSJ) reported earlier today that an agreement is taking shape with Beijing offering to lower tariffs and other restrictions on the American farm, chemical, auto, and other products and Washington considering removing most, if not all, sanctions imposed on Chinese products since last year.
The US-China trade deal, however, has likely been priced in over the last two weeks. The CNH picked up a strong bid in mid-Fed on reports the Trump administration is planning to push back the March 1 deadline by 60 days and has remained on the offensive ever since.
Validating that argument is the death cross (lagging indicator) – a bearish crossover of the 50- and 200-day moving averages (MAs), which indicates that the sell-off may have been done for now.
Put simply, the pair has likely been sold on rumors over the 2-3 weeks and could witness a “buy the fact” trade, if both sides manage to reach a deal, as expected by markets. The pair may reverse the recent sell-off if due to some reasons the deal remains elusive.
Technical Levels
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