- USD/CNH takes offers to reverse the previous day’s recovery moves, the first in three.
- China NBS Manufacturing PMI improves, Non-Manufacturing PMI eases in August.
- Convergence of 100-SMA, three-week-old rising support line restricts immediate downside.
- Yuan bears need validation from 7.3050 to challenge yearly top.
USD/CNH reverses the previous daily gains, the first in three, while poking the 7.2880-60 support confluence after China releases monthly activity data on Thursday.
The upbeat prints of China’s official manufacturing gauge contrast with the downbeat non-manufacturing PMI but manage to keep the offshore Chinese Yuan (CNH) buyers hopeful, especially amid the dovish Fed bias and hopes of more stimulus from the Dragon Nation. That said, China’s official NBS Manufacturing PMI for August rose to 49.7 versus 49.4 expected and 49.3 previous readings whereas the Non-Manufacturing PMI came in as 51.0 compared to 51.5 prior and market forecasts of 51.1.
However, a convergence of the 100-SMA and an ascending trend line from August 10, restricts the immediate downside of the USD/CNH pair.
Given the quote’s repeated attempt to break the 100-SMA and the stated support line confluence, around 7.2880-60, coupled with the downbeat US Dollar, the USD/CNH is likely to slip beneath the said key support, which in turn highlights a five-week-long support line of 7.2790.
In a case where the USD/CNH drops below 7.2790, its slump to the August 08 swing high of around 7.2510 and then to the 200-SMA level of near 7.2350 can’t be ruled out.
Meanwhile, the offshore Yuan pair’s recovery remains elusive unless it crosses a one-week-old descending resistance line, close to 7.3050 by the press time.
Following that, 7.3360 may act as an intermediate halt before directing the USD/CNH prices toward the yearly peak of 7.3496.
USD/CNH: Four-hour chart
Trend: Further downside expected
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 retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.