USD/CNH holds above 6.8 after bullish outside-day

• The yuan offshore exchange rate remains on the defensive after the weaker PBOC fix.
• The USD/CNH pair is holding above 6.80, having created a bullish outside-day continuation pattern yesterday.

The USD/CNH pair (offshore yuan exchange rate) rose to 6.8306 earlier today and was last seen trading largely unchanged around 6.8227.

The offshore exchange rate came under pressure in early trading as the People's Bank of China raised the CNY daily fix to 6.7942 from the previous day's three-week low of 6.7662.

Further, the bullish outside-day candle (bullish continuation pattern) created on Thursday also called for a further depreciation in the CNH, however, overbought conditions are likely capping the rise in the USD/CNH pair.

Should the pair deflate from here, the AUD and other Aussie proxies, Asian currencies and commodities could witness a relief rally.

USD/CNH Technical Levels

Resistance: 6.8360 (previous week's high), 6.8443 (weekly high), 6.859 (June 2017 high).

Support: 6.7736 (10-day MA), 6.738 (previous day's low), 6.7329 (July 3 high).