• USD/CNY edged higher on Wednesday as the yuan softened following weaker-than-expected Chinese inflation data, which reinforced expectations of further policy easing.
• Consumer inflation in China fell at its quickest rate in six months in August, even as producer price declines slowed..
• The consumer price index was down 0.4% from a year earlier, worse than a poll forecast of a 0.2% dip.
• Separate data showed, the producer price index dropped 2.9% year-on-year in August, narrowing from a 3.6% decline the previous month.
• The yuan has firmed more than 3% against the dollar since early April, as Chinese stocks have also rallied sharply.
• At GMT 05:05 the dollar was up 0.04% to 7.123 against the Chinese Yuan.
• Immediate resistance is located at 7.130(Daily high) any close above will push the pair towards 7.149(SMA 20)
• Support is seen at 7.117(23.6%fib) and break below could take the pair towards 7.107 (Lower BB).
Recommendation: Good to sell around 7.130, with stop loss of 7.150 and target price of 7.100
