- USD/CNH snaps two-day downtrend after softer-than-expected China CPI, PPI for July.
- Bulls pierced weekly resistance line, 200-HMA after data, sustained break of 6.7600 awaited for further upside.
- 61.8% Fibonacci retracement level, ascending trend line from July 31 restrict immediate downside.
USD/CNH remains firmer around the daily top after China flashed downbeat inflation numbers for July. That said, the offshore Chinese yuan (CNH) pair marks the first daily gains in three while grinding higher around 6.7600.
China’s headline Consumer Price Index (CPI) eases to 2.7% YoY in July versus 2.9% expected and 2.5% prior. Further, the Producer Price Index (PPI) dropped to 4.2% compared to 8.0% market forecasts and 6.1% previous readings.
Following the data, the USD/CNH bulls crossed the 6.7600 key hurdle comprising the 200-HMA and a one-week-old descending resistance line, before retreating from 6.7600.
However, a pick-up in the RSI (14) and the quote’s successful trading above the 61.8% Fibonacci retracement of July 29 to August 02 upside, near 6.7540, keeps the USD/CNH buyers hopeful.
That said, the weekly top surrounding 6.7710 is likely luring the pair buyers of late, a break of which could direct the north-run towards the monthly peak of 6.7955 and then to the 6.8000 threshold.
Meanwhile, pullback moves remain elusive beyond the 61.8% gold ratio near 6.7540. Also acting as a downside filter is the seven-day-long support line close to 6.7485.
In a case where USD/CNH drops below 6.7485, the odds of its slump to the late July low near 6.7285 can’t be ruled out
USD/CNH: Hourly chart
Trend: Further upside expected