USD/CNH snaps three-day uptrend with eyes on PBOC, Fed

USD/CNH keeps pullback from monthly high near intraday low.
Evergrande fears fade as traders brace for PBOC, Fed.
Market sentiment improves amid mixed concerns, lack of major negatives.

USD/CNH remains pressured around intraday low, down for the first time in four days as European traders brace for Tuesday’s task. The offshore Chinese currency (CNH) pair eases on the market’s consolidation ahead of the key monetary policy meetings by the People’s Bank of China (PBOC) and the US Federal Reserve (Fed).

Behind the moves is the cautious optimism in the market as Evergrande Chairman Tries to placate bears, as well as the lack of major data/events that negatively affect the risk appetite. It’s worth noting that the consolidation ahead of tomorrow’s PBOC decision could also be linked to the latest USD/CNH moves.

Furthermore, increasing hopes of the US stimulus, as conveyed by US House Speaker Nancy Pelosi, as well as an extension of the American debt limit urged by US Treasury Secretary Janet Yellen, exert additional downside pressure on the USD/CNH prices.

Even so, an off in China and fears concerning the Fed tapering challenge the pair sellers. While portraying the risk-on mood, S&P 500 Futures rise 0.30% intraday gains while the US 10-year Treasury yields consolidate the latest losses around 1.31% by the press time. It’s worth observing that the US Dollar Index (DXY) prints 0.07% intraday loss while easing to 93.20, from a monthly high.

Looking forward, PBOC may ease monetary policy further to release some pressure off the economy, piled due to the Evergrande saga. However, any surprise won’t hesitate to drag the quote back below the 200-SMA.

Read: PBoC September Preview: Will policymakers step in to ease Evergrande fears?

Following that, the Fed tapering woes bear mixed concerns and hence become a wild card for the markets to follow.

Read: Can the Fed disrupt stock market gains, and why China’s evergrande is causing wobbles elsewhere

Technical analysis

200-DMA around $6.4730 challenges the USD/CNH pullback from a two-month-old resistance line, close to $6.4880.


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