USD/CNH Price Analysis: Yuan buyers attack 7.2880–60 confluence on upbeat China NBS Manufacturing PMI
- 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
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.
