USD/CNH bears aim to fill May 2019 upside gap as greenback turns heavy ahead of Fed

USD/CNH prints a four-day losing streak to refresh the 18-month low.
The recent surge in the US COVID-19 cases joins the pre-Fed caution to weigh on the pair.
Chinese Yuan cheers upbeat data at home, recovery from the pandemic.
Sino-American trade tussle continues with the WTO opposing American sanctions.

Anil Panchal FXStreet

USD/CNH extends its four-day downward trajectory to 6.7682, with a 0.17% intraday loss, amid Wednesday’s initial trading on Chinese bourses. The offshore Yuan pair slumps to the lowest since May 2019 as the US dollar fails to keep the previous day’s recovery moves ahead of the key Federal Reserve (Fed) monetary policy decision.

Other than the US dollar consolidation, the mixed signals concerning the risk catalysts and a light calendar also weigh on the pair.

Following the World Trade Organization’s (WTO) verdict to term the Trump administration’s anti-trade measures on Beijing products, the US blacklists another Chinese firm that helps to build military weapons in Cambodia. On Tuesday, America canceled its ban on cotton and tomato imports from Xinjiang whereas the dragon nation extended tariff relief from the goods coming from Washington.

Also contributing to the pair’s strength could be the comments from the National Development and Reform Commission of the People's Republic of China (NDRC). The state planner recently mentioned that it approved projects worth 88.2 billion Chinese Yuan in August. The Asian major has already rolled out intentions of self-reliance and the same will be official after October month’s meeting on the five-year plans.

Elsewhere, Texas registered the biggest jump in three weeks in the daily coronavirus (COVID-19) cases with 4,816 new numbers for Tuesday. While identifying the same, China’s Global Times (GT) says, “The yuan is showing an appreciation trend as China's economy rises and the dollar is battered by coronavirus.”

Looking forward, a lack of major data/events offers a little hope for any trend change and hence the bears are likely to dominate for a while. However, the trading momentum may shrink before the US central bank announcements.

Read: September FOMC Preview: Projections, projections, projections

Technical analysis

The early-May 2019 top surrounding 6.7510 is on the bears’ radars while a falling trend line from July 22, at 6.7545 now, can question the USD/CNH sellers afterward. Meanwhile, the monthly high of 6.8610 can restrict the pair’s short-term upside.

Additional important levels

Overview
Today last price	6.7692
Today Daily Change	-0.0108
Today Daily Change %	-0.16%
Today daily open	6.78

Trends
Daily SMA20	6.8591
Daily SMA50	6.931
Daily SMA100	7.0142
Daily SMA200	7.0111

Levels
Previous Daily High	6.8106
Previous Daily Low	6.7662
Previous Weekly High	6.861
Previous Weekly Low	6.8252
Previous Monthly High	6.9938
Previous Monthly Low	6.8436
Daily Fibonacci 38.2%	6.7831
Daily Fibonacci 61.8%	6.7937
Daily Pivot Point S1	6.7606
Daily Pivot Point S2	6.7411
Daily Pivot Point S3	6.7161
Daily Pivot Point R1	6.8051
Daily Pivot Point R2	6.8301
Daily Pivot Point R3	6.8496

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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