• 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
