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  • The CNH (offshore yuan exchange rate) is recovering early losses, despite dismal China official PMI readings.
  • The USD/CNH is threatening a daily close below the trendline connecting the Aug. 27 and Sept.21 lows.

The USD/CNH is currently trading at 6.9367, having clocked a session high of 6.9438 earlier today.

The offshore yuan exchange rate fell earlier today after China’s official purchasing managers’ index (PMI) showed the factory growth unexpectedly stalled in November. The PMI  fell to 50.0 in November –   a neutral level, which  indicates neither growth in activity nor contraction. Notably, analysts were expecting the PMI to print at 50.2.

The data indicate the ongoing trade war with the US is indeed having a negative impact on the world’s second-largest economy. As a result, Beijing may feel pressured to roll out more stimulus.

The rise to a session high of 6.9438, however, was short-lived, possibly due to Fed minutes, which underpinned expectations that the current tightening cycle is nearing an end.

Notably, the pair is threatening to close below the rising trendline support, which reversed pullbacks in October and earlier this month. The ascending trendline breakdown, if confirmed, would validate the bearish divergence of the 14-week relative strength index (RSI) and open the doors to a deeper sell-off.

The breakdown, however, may trap the bears on the wrong side of the market if Trump-Xi meeting fails to produce at least a pause in the trade war.

USD/CNH Technical Levels

USD/CNH

Overview:
       Today Last Price:  6.9367
       Today Daily change:  23  pips
       Today Daily change %:  0.0332%
       Today Daily Open:  6.9344
Trends:
       Previous Daily SMA20:  6.9335
       Previous Daily SMA50:  6.9224
       Previous Daily SMA100:  6.8773
       Previous Daily SMA200:  6.6316
Levels:
       Previous Daily High:  6.9455
       Previous Daily Low:  6.9306
       Previous Weekly High:  6.9504
       Previous Weekly Low:  6.9191
       Previous Monthly High:  6.9798
       Previous Monthly Low:  6.8674
       Previous Daily Fibonacci 38.2%:  6.9363
       Previous Daily Fibonacci 61.8%:  6.9398
       Previous Daily Pivot Point S1:  6.9281
       Previous Daily Pivot Point S2:  6.9219
       Previous Daily Pivot Point S3:  6.9132
       Previous Daily Pivot Point R1:  6.9431
       Previous Daily Pivot Point R2:  6.9518
       Previous Daily Pivot Point R3:  6.958