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  • China’s key officials keep flashing warnings to the US.
  • The US will collect extra deposits from importers of Chinese structural steel.
  • This week’s US-China trade talks will be the key to watch.

With the recently disturbing signs of a trade relationship between the US and China spreading across the global media, the USD/CNH pair remains on a back foot while taking the rounds to 6.8877 during early Asian morning on Tuesday.

While Chinese press conveys direct threats to the US, the US Commerce Department recently announced a collection of extra deposits from importers of Chinese structural steel.

Some among China’s political fraternity, like Foreign Vice-Minister Le Yucheng, have gone a step further by directly warning of the ‘disastrous consequences’ to the US if it treats China as an enemy.

Even if the US and Chinese diplomats are up for fresh trade negotiations during the week, such spoilers from media damage market sentiment ahead of the event and also carry negative impact amid the discussions.

Additionally, China is likely to push the US toward easing its stance on Huawei and national security, as per SCMP, which in turn increase the doubts over any breakthrough from the trade contact.

Other than trade, clues for the latest concerns surrounding the US Federal Reserve’s future rate cuts will also be observed during the Fed policymakers’ appearances scheduled during the day.

Technical Analysis

A month old descending trend-line and 200-bar moving average on the 4-hour chart (4H 200MA) can keep the pair’s upside limited around 6.90/91 ahead of fueling it to June month top near 6.96. On the contrary, 6.8700 and 6.8166 seem key supports.