Ella 
After USD/CNH surged to a high of 7.3678 last Friday, we highlighted yesterday that “the rally appears to be overdone and USD/CNH is unlikely to rise further. We did not expect USD/CNH to fall sharply to 7.2921” ’s lows. Despite rebounding from the lows, the weakness in USD/CNH has not stabilized. Today, USD/CNH may fall further to 7.2870 before stabilizing. Initial resistance is at 7.3210, followed by 7.3330.
Outlook for the next 1-3 weeks: Yesterday (September 11, when the price was 7.3560), we believed that USD/CNH may rise further to 7.3800, with a test of 7.4000 less likely. USD/CNH subsequently plummeted to 7.2921 low, closing down 0.86% (NY close 7.3018), the biggest one-day drop in about 6 months. While it is too early to expect a major reversal, a sharp pullback could extend to 7.2600. Overall , only a break above 7.3520 would indicate that USD/CNH is not ready for a further correction.
