USD/CNH struggles to cheer USD weakness near 6.7000 on fresh covid fears

USD/CNH pares intraday losses around 12-day low as Beijing reports record new covid cases.
Shanghai’s central Jingan district requires all supermarkets and shops to shut and residents to stay home until Tuesday.
PBOC rate cut, overall reduction in mainland numbers and repeated Fedspeak seem to defend the bears.
US inflation, PMI and growth numbers will be important for fresh impulse.

Anil Panchal FXStreet

USD/CNH picks up bids to 6.7030 as fresh covid numbers renew China’s virus woes during Monday’s Asian session. Also keeping USD/CNH buyers hopeful are the concerns over the next moves concerning the Fed and the PBOC, as traders witness mixed numbers of late.

That said, China’s Beijing reports the record new covid cases on Monday, which in turn renewed expectations of fresh lockdowns and weigh on the market sentiment. ''The city reported 99 cases for Sunday, up from 61 on Saturday,'' said Bloomberg.

During the weekend, Reuters reported that Shanghai's central Jingan district, a key commercial area of the Chinese financial hub, will require all supermarkets and shops to shut and residents to stay home until at least Tuesday.

It’s worth noting, however, that the Mainland China's new coronavirus cases eased to 869 from 898 prior.

Elsewhere, the People’s Bank of China’s (PBOC) rate cut contrasts the Fed’s rate hike bias and underpins the USD/CNH bullish trajectory, even as repeated Fedspeak favoring 50 bps joined the mixed US data weighed on the quote the last week.

China’s news seems to weigh on the risk appetite but the optimists keep the reins of late. That said, the US 10-year Treasury yields rise by around 1.5 points (bps) to 2.80% whereas the S&P 500 Futures add near 1.0% gains, to 3,940 at the latest, by extending recovery from the one-year low marked during the last week.

Moving on, the US core PCE price index for April, the Fed’s preferred inflation gauge, joins the second reading of the US Q1 2022 GDP and preliminary PMIs for May to entertain traders. Also important will be the Minutes of the latest Federal Open Market Committee (FOMC), as well as signals from China, Russia and the Quad Summit in Tokyo.

Technical analysis

Although 21-DMA defends USD/CNH bulls around 6.7000, a convergence of the 10-DMA and weekly resistance line, around 6.7600, challenges the pair’s short-term recovery.

Additional important levels

Overview
Today last price	6.6986
Today Daily Change	-0.0020
Today Daily Change %	-0.03%
Today daily open	6.7006

Trends
Daily SMA20	6.7021
Daily SMA50	6.5134
Daily SMA100	6.4309
Daily SMA200	6.4244

Levels
Previous Daily High	6.7424
Previous Daily Low	6.6726
Previous Weekly High	6.8206
Previous Weekly Low	6.6726
Previous Monthly High	6.694
Previous Monthly Low	6.3512
Daily Fibonacci 38.2%	6.6993
Daily Fibonacci 61.8%	6.7158
Daily Pivot Point S1	6.668
Daily Pivot Point S2	6.6354
Daily Pivot Point S3	6.5982
Daily Pivot Point R1	6.7378
Daily Pivot Point R2	6.775
Daily Pivot Point R3	6.8076

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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