USD/CNH Price Analysis: Remains capped below the 7.2100 mark following PBoC rate decision

The USD/CNH pair trades in negative territory for the fifth consecutive day during the early European session on Tuesday. The People's Bank of China (PBoC) cut the five-year Loan Prime Rate (LPR) by 25 basis points (bps) from 4.20% to 3.95%, which is a key benchmark lending rate used to price mortgages. Meanwhile, the one-year LPR remained unchanged at 3.45%. USD/CNH is trading at 7.2090, down 0.03% on the day.

According to the daily chart, the bullish outlook of USD/CNH remains intact as the pair is above the key 100-day Exponential Moving Averages (EMAs). Additionally, the 14-day Relative Strength Index (RSI) lies above the 50-midlines, suggesting the path of least resistance is to the upside.

The first downside target of USD/CNH will emerge at the 100-day EMA at 7.2018. A breach of this level will see a drop to a low of February 7 at 7.1888. Further south, the next contention level to watch is a low of January 26 at 7.1776. The critical support level is located at the confluence of the psychological level and the lower band of the Bollinger Band.

On the upside, the immediate resistance level is seen at a high of February 14 at 7.2336. The next hurdle is located at the upper band of the Bollinger Band at 7.2388. A break above the latter will pave the way to a low of November 8 at 7.2664, en route to a high of November 13 at 7.3106.

USD/CNH daily chart