USD/CNH technical analysis: Drops 0.30% making 6.90 the level to beat for bulls

USD/CNH has established a bearish lower high at 6.90.
A close above 6.90 is needed to revive the bullish setup.
A break below Wednesday's low would expose key average support.

Omkar Godbole FXStreet Contributor

USD/CNH dropped 0.30% on Wednesday, courtesy of Federal Reserve's Chairman Jerome Powell's dovish testimony and the resulting six basis point drop in the US two-year Treasury yield.

Notably, with the 0.30% drop, the pair has established a bearish lower high at 6.90. As a result, a break above 6.90 is needed to invalidate the bearish lower high and revive the bullish outlook.

A daily close above 6.90 would also confirm an upside break of the trendline connecting June 10 and June 18 highs and open the doors to 6.9394 (June 18 high).

A bullish close could happen this week. After all, the markets are already priced for two Fed rate cuts this year.

As of writing, the USD/CNH pair is trading at 6.8739. Acceptance below Wednesday's low of 6.8694 would validate the bearish lower high and the rejection at the falling trendline and allow a deeper drop to 6.8352 (200-day MA).

Daily chart

Trend: Bullish above 6.90

Pivot points

1. R3 6.9164
2. R2 6.9065
3. R1 6.8897
PP 6.8798
1. S1 6.863
2. S2 6.8531
3. S3 6.8363

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD stays below 1.1850 after dismal German sentiment data

EUR/USD stays in negative territory below 1.1850 in the second half of the day on Tuesday. Renewed US Dollar strength, combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.

GBP/USD falls toward 1.3550, pressured by weak UK jobs report

GBP/USD remains under bearish pressure and extends its decline below 1.3600 on Tuesday. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month and making it difficult for Pound Sterling to stay resilient against its peers.

Gold recovers modestly, stays deep in red below $4,950

Gold (XAU/USD) stages a rebound but remains deep in negative territory below $4,950 after touching its weakest level in over a week near $4,850 earlier in the day. Renewed US Dollar strength makes it difficult for XAU/USD to gather recovery momentum despite the risk-averse market atmosphere.

Canada CPI expected to show sticky inflation in January, still above BoC’s target

Economists see the headline CPI rising by 2.4% in a year to January, still above the BoC’s target and matching December’s increase. On a monthly basis, prices are expected to rise by 0.1%.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Stellar mixed sentiment caps recovery

Stellar price remains under pressure, trading at $0.170 on Tuesday after failing to close above the key resistance on Sunday. The derivatives metric supports the bearish sentiment, with XLM’s short bets rising among traders and funding rates turning negative.