- USD/CNH retreats from YTD high, renews intraday bottom to prod four-day uptrend.
- Overbought RSI, market’s preparations for Fed Minutes trigger Yuan’s corrective bounce.
- Previous resistance line limits immediate downside within multi-month-old bullish channel.
USD/CNH takes offers to refresh intraday low near 7.3160 during early Wednesday morning in China. In doing so, the offshore Chinese Yuan (CNH) pair reverses from the Year-To-Date (YTD) high marked earlier in the day as markets prepare for the Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes.
Also read: Forex Today: US data keeps the Dollar at monthly highs
It’s worth noting that the downbeat print of China House Price Index for July, -0.1% versus 0.0% prior, joins the previously released disappointing Industrial Production and Retail Sales for the said month to keep the USD/CNH buyers hopeful despite the latest pullback.
That said, the overbought RSI (14) line joins the market’s pre-event consolidation to direct the USD/CNH price towards the previous resistance line stretched from late October 2022, around 7.2680 at the latest. During the anticipated fall, the 7.3000 threshold might act as an intermediate halt.
However, the USD/CNH bulls remain hopeful unless the Yuan pair remains within an ascending trend channel comprising multiple levels marked since late February, currently between 7.3950 and 7.1730.
Meanwhile, a horizontal area comprising multiple tops marked during late 2022, around 7.3550–3750 appears a tough nut to crack for the USD/CNH bulls, especially amid the overbought RSI conditions.
USD/CNH: Daily chart
Trend: Limited downside expected
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