- USD/CNH climbs to over a one-week high during the Asian session on Wednesday.
- The uptick lacks follow-through as investors keenly await the FOMC rate decision.
- A break below the 50-day SMA is needed to support prospects for a meaningful fall.
The USD/CNH pair edges higher for the third successive day on Wednesday and climbs to over a one-week high, around the 7.3125 region during the Asian session. The technical setup, meanwhile, seems tilted in favour of bullish traders and supports prospects for an extension of the recent bounce from the 7.2595 region, or a nearly two-week low touched last Friday.
The constructive outlook is reinforced by the fact that the USD/CNH pair is holding comfortably above technically significant 50-day, 100-day and 200-day Simple Moving Averages (SMAs). That said, oscillators on the daily chart are yet to confirm a positive bias and warrant some caution before placing aggressive bullish bets ahead of the highly-anticipated FOMC monetary policy decision, due to be announced later during the US session.
In the meantime, strength beyond the 7.310 level might have set the stage for additional gains, through any subsequent move up is likely to confront resistance near the 7.3360-7.3365 region en route to the 7.3495 zone. Some follow-through buying beyond the 7.3500 level should allow the USD/CNH pair to accelerate the momentum further towards challenging a multi-year peak, around the 7.3680-7.3685 region touched on September 8.
A sustained strength beyond the latter will be seen as a fresh trigger for bulls and pave the way for an extension of the USD/CNH pair's well-established uptrend witnessed since the beginning of this year.
On the flip side, the 7.2985-7.2885 horizontal support should protect the immediate downside ahead of the 7.2800 round figure and last Friday's low, around the 7.2595 zone. This is closely followed by the 50-day SMA, currently near the 7.2435 zone, which if cleared decisively could prompt aggressive technical selling and drag the USD/CNH pair below the 7.2390 region, or the monthly low, towards testing the next relevant support near the 7.2135-7.2130 area.
USD/CNH daily chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.