USD/CNH Price Analysis: Advances to over one-week high, around 7.3100 ahead of FOMC

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