USD/CNH sell-off stalls near 38.2% Fib retracement level

• USD/CNH has retraced 38.2% of the recent rally. 
• The pair dropped for third straight day on Thursday on dovish Fed. 

The sell-off in USD/CNH pair seems to have stalled near 6.8527, which is the 38.2 percent Fibonacci retracement of the rally from April 18 lows to June 7 highs. 

The currency pair is currently trading at 6.8595, having printed lows near 6.8475 on Thursday. 

The pair dived out of the sideways channel on June 18 on dovish Federal Reserve (Fed) expectations and fell remained on the defensive, falling by 0.48% on Thursday, possibly tracking the slide in the US treasury yields to multi-year lows. 

Notably, the US 10-year yield fell below 2 percent on Thursday to print the lowest level since the final quarter of 2016. 

The Fed kept rates unchanged as expected, but removed the word patient from its language on interest rates and signaled readiness to cut rates, if required. 

Markets now appear fully priced in for a rate cut in July and another rate cut by the year end. With dovish expectations priced in, the USD/CNH pair may consolidate around the 38.2% Fibonacci retracement for a couple of days. 

Also, escalating geopolitical tensions between the US and Iran may weigh over risk assets, capping upside in China’s offshore Yuan (CNH). 

Pivot levels