USD/CNH pulls back from monthly resistance trendline amid Hong Kong concerns

USD/CNH fails to hold on to recovery gains as protests in Hong Kong magnify US-China trade pessimism.
Trump’s comments from the New York Economic Club luncheon will keep the spotlight.

Anil Panchal FXStreet

The US-China trade story recent got another negative turn with the US condemning Hong Kong protests and pushes China to respect the nation’s autonomy. With this, the USD/CNH pair fails to cross a monthly trend line resistance while trading around 7.0028 during Tuesday’s Asian session.

While the US President’s refrain from reiterating the previous signals to tariff cut on Chinese goods triggered initial risk aversion during Monday, renewed protests in Hong Kong and the US meddling dim prospects of a trade deal between the world’s two largest economies.

The US State Department’s latest statement urges China to respect commitments that Hong Kong will enjoy a high degree of autonomy. The Trump administration also condemns violence in the protests.

That said, the US 10-year treasury yields remain on the back foot to 1.92% while Asian stocks also mark losses during early hours of trading.

On the economic front, China’s inflation numbers flashed mixed signals during the weekend and hence traders will wait for Thursday’s Industrial Production and Retail Sales for fresh impulse. However, the bearish bias of the People’s Bank of China (PBOC), as conveyed through recent USD/CNY fixes and comments from the policymakers, could keep traders entertained.

Looking at the near-term, the United States (US) President Donald Trump is up for speaking at the Economic Club Luncheon in New York and will be observed closely for any hints to trade talks with China.

Technical Analysis

Unless providing a daily closing beyond the monthly falling trend line, at 7.0055 now, prices are less likely to aim for current month top near 7.0520. Alternatively, June month high around 6.9600 could offer immediate key support to the pair.

Additional important levels

Overview
Today last price	7.0028
Today Daily Change	-0.0041
Today Daily Change %	-0.06%
Today daily open	7.0069

Trends
Daily SMA20	7.0473
Daily SMA50	7.088
Daily SMA100	7.0325
Daily SMA200	6.9119

Levels
Previous Daily High	7.0137
Previous Daily Low	6.9592
Previous Weekly High	7.0485
Previous Weekly Low	6.9524
Previous Monthly High	7.1705
Previous Monthly Low	7.0295
Daily Fibonacci 38.2%	6.9929
Daily Fibonacci 61.8%	6.98
Daily Pivot Point S1	6.9728
Daily Pivot Point S2	6.9388
Daily Pivot Point S3	6.9184
Daily Pivot Point R1	7.0273
Daily Pivot Point R2	7.0477
Daily Pivot Point R3	7.0818

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.

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