MNI China Daily Summary: Wednesday, July 10

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CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS WEDS

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Tech Focus: LatAm FX Price Signal Summary: USD Remains Soft

EMERGING MARKETS
  • USDMXN is consolidating but maintains a bearish tone.
    • This follows recent weakness that resulted in a break on Mar 31 of trendline support drawn off the Jan 21 low. Bears have since not looked back.
    • Furthermore, price has also traded through the Mar 18 low of 20.2829 - a former key support. The break strengthens a bearish argument and this week, support at 19.8924, Feb 15 low has been breached. The focus is on 19.5494, Jan 21 low.
    • On the upside, resistance is at 20.2427, Apr 13 high.
  • USDBRL remains vulnerable. The pair has this week breached support at 5.5396, Apr 8 low. An extension of the current bear cycle would confirm two key developments:
    • The clear break of trendline support drawn off the Dec 14 low.
    • A bearish triangle breakout. Price action since Mar 9 has been trading within a triangle. This pattern was considered a bullish signal however the continued move lower suggests the breakout will likely favour bears. Attention is on 5.4499, Mar 19 low.
    • Key near-term resistance is unchanged at 5.6771, Apr 16 high.
  • USDCLP has gapped higher today however despite this, the outlook remains bearish and the pair remains in a downtrend. The pair has this week traded below 699.19, Feb 24 low. This signals scope for weakness towards the primary support at 693.00, Jan 6 low. A break of this level would confirm a resumption of the broader downtrend that started March 2020 and would open 686.05, 1.618 projection of the Oct 15 - Nov 9 - Nov 24 price swing. Initial resistance is at 714.50, Apr 13 high.
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