CNH: USD/CNH Edges Higher, Underperforms Softer USD Trend

USD/CNH tracks near 7.2000 in early Tuesday dealings. The CNH gained 0.55% for Monday's session, significantly outperforming broader USD index gains (DXY rose 1.44%, BBDXY +1.03%). This followed US and China agreeing to pause their retaliatory reciprocal tariffs for 90 days, which saw a surge in US Equities (SPX +3.29%). Spot USD/CNY finished up at 7.2053, while the CNY CFETS basket was little changed at 96.49 (per BBG). 

• For spot USD/CNH, intra-session lows from Monday were at 7.1922, so just above lows from last week (7.1845). A clean break lower could see the 7.1500-7.1600 region targeted in the pair. On the topside, recent highs around the 200-day EMA have come in just above 7.2500.  
• CNH/JPY rose close to 2.7% Monday, putting the pair back above 20.62, which is back near early April highs.
• A 90-day pause in the U.S.-China tariff standoff will "set a path for future discussions to open market access for American exports," the White House said in a statement Monday. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will "establish a mechanism to continue discussions about economic and trade relations," according to a joint statement by Washington and Beijing.
• US President Trump also stated that China has agreed to remove non-tariff barriers for imports from the US. Trump warned though if an agreement wasn't made within the 90 days that tariff levels would rise from 30% (which is the new level that applies after the pause) but wouldn't go back to 145%.
• The Golden Dragon index rose 5.40% in Monday US trade. The index is just under early April levels. 

• RES 3: 97.190 - High May 5 2023
• RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg 
• RES 1: 96.860 - High Apr 07
• PRICE: 96.430 @ 16:22 BST May 12
• SUP 1: 95.900 - Low Jan 14  
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

Aussie 3-yr futures continue to circle just below recent contract highs, having cleared resistance on the continuation contract. The rally has taken out resistance at 96.730, the Sep 17 ‘24 high. On the downside, any reversal lower from current levels would signal a resumption of a downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.