Thu. Jan 27th, 2022

Today, China supports market optimism with a firm version of PMI services. The index rose to 54.9 in July, marking an acceleration after the failure of 50.3 in June and alarming manufacturing activity data earlier in the week.

The dollar retreated to 6.45 Chinese yuan, a support area since the end of June, thanks to a good recovery in demand for risky assets. Yesterday, China caused a stir with an angry article in a state-owned newspaper about gaming services, which further fueled fears that Politburo policies would deprive China of its appeal to foreign investors. However, the item was soon withdrawn and local stocks renewed buying after a sharp drop last month.

USDCNH will signal the strength of the USD dollars in the fall below the support line at 6.45 and 50 SMA. This could pave the way for a rapid reversal to more global lows at 6.35 and more at 6.25 if the Fed continues to show its slowness in reducing the stimulus.

He FxPro Team of analysts

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