FxWirePro: USD/CNY drifts lower, vulnerable to more downside

• USD/CNY edged lower on Tuesday as China's yuan firmed after PBOC set its strongest rate in nearly three years, but volatility is expected from the Iran conflict and tense U.S.-China trade relations.

• Traders are watching the Middle East closely as the U.N. Security Council prepares to vote on a resolution to safeguard shipping in the Strait of Hormuz.

• The U.S. and Iran exchanged sharp words as President Trump threatened military action if Tehran doesn’t strike a deal by Tuesday night.

•Meanwhile, a bipartisan group of U.S. lawmakers has proposed a law to tighten restrictions on exports of computer chipmaking equipment to China

• Before markets opened, the People’s Bank of China set the yuan’s midpoint rate at 6.8854 per dollar, its strongest since April 25, 2023.

•  Immediate resistance is located at 6.6888(SMA 20), any close above will push the pair towards 6.897(38.2%fib)

• Support is seen at 6.6867(38.2%fib) and break below could take the pair towards 6.860(Lower BB).

Recommendation: Good to sell  around 6.875 with stop loss of 6.930 and target price of 6.830