USD/CNH Moves Below 7.20 Remain Shallow For Now

USD/CNH moves below CNH7.20 remain relatively shallow after the USD pared losses in pre-NY trade (e-minis hold a little lower with an eye on Nvidia earnings).

• Lows of CNH7.1811 were printed before the move back to the CNH7.20 zone.
• Initial support (Feb 7 low CNH7.1888) was breached on the move.
• The next bearish target is located at 50-DMA (CNH7.1804), followed by the Jan 31 low (CNH7.1728).
• A breach of the latter would turn the technical tide a little more in the favour of yuan bulls.
• In terms of yuan-specific drivers, the continued swelling of the property development financing “whitelist,” mainland equity bid and related HK-China Stock Connect inflows (highest net buying since Jul ’24 at CNY13.6bn) were supportive for the yuan in Asia hours.
• Participants remain eager for more Chinese market-specific & broader policy support.
• Reports of further trading restrictions showed up after hours, with BBG sources flagging a ban of net equity sales around market open and close.
• CNH TN funding has loosened a little post-Chinese NY.