• USD/CNY dipped on Wednesday as China’s yuan extended gains after the PBOC set its strongest fixing in nearly three years amid a softer dollar.
• Prior to the market opening, the People's Bank of China set the midpoint rate at 6.8909 per dollar, the strongest since April 2023, although it was 111 pips weaker than a Reuters' estimate.
• The spot yuan is allowed to trade 2% either side of the fixed midpoint each day.
• Meanwhile, dollar index fell for a second day, dropping below the key 100 level ahead of the Federal Reserve decision on Wednesday.
• The yuan is down 0.3% against the dollar this month, but 1.6% firmer for the year..
• Immediate resistance is located at 6.885 (SMA 20), any close above will push the pair towards 6888 (38.2%fib).
• Support is seen at 6.850(Lower BB) and break below could take the pair towards 6.835 (23.6%fib).
Recommendation: Good to sell around 6.880 with stop loss of 6.910and target price of 6.850
