FxWirePro: USD/CNY hits 10-month low ahead of Fed verdict

• USD/CNY slipped to new 10 month low on Wednesday as the pair attracted selling ahead of Fed rate decision.

• The Fed is projected to lower its benchmark interest rate by 25 basis points, bringing it to a 4.00%–4.25% range at the conclusion of its policy meeting..

• Beyond the rate decision, markets will be watching Fed Chair Jerome Powell’s remarks for insights into the outlook for U.S. monetary policy.

• The yuan, like other major Asian currencies, has been buoyed by dovish Fed expectations.

•  Prior to the market opening, the PBOC set the USDCNY midpoint at 7.1013 per dollar, only 8 pips stronger than estimate of 7.1021 , the narrowest gap since July 1.

• Since November, the PBOC has consistently set stronger-than-expected midpoint rates, which market participants interpret as an effort to stabilize the yuan.

•  Immediate resistance is located at 7.113(Daily high), any close above will push the pair towards 7.135(SMA 20).

• Support is seen at 7.102(23.6%fib) and break below could take the pair towards 7.090 (Lower BB).

Recommendation: Good to sell around 7.105, with stop loss of 7.120 and target price of 7.090