The CNY is likely to appreciate further against the USD.

The USDCNH reversed lower last October and rode the USD weakness. Early December we broke through a H&S formation pattern and after a S/T consolidation we seem to be resuming the downside.

The fundamental backdrop might also be assisting the trade here with China being in the process of moving away from the zero covid policy and attempting social and economic activity normalization. We are currently testing the 61.8% Fib of the move from February lows to the 7.37 high and a break below it should bring us to the completion of the H&S target at 6.70. Keep looking lower against 7.02.

USDCNH H&S Formation playing out

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