USD/CNH Price Analysis: 50-SMA defends bulls on the key day
- USD/CNH consolidates previous day’s losses, sidelined of late.
- Firmer RSI, prior resistance line from August 20 also favor buyers.
- Important Fibonacci retracement levels, six-week-old falling trend line add to the upside filters.
USD/CNH aptly portrays the mixed inflation data from China, published during early Thursday. In doing so, the quote seesaws above 50-SMA, around 6.4590 by the press time.
China Consumer Price Index (CPI) dropped below 1.0% forecast and prior to 0.8% YoY, also declining below 0.5% market consensus on MoM to 0.1%, whereas the Producer Price Index (PPI) crossed 9.0% expected figures with 9.5% level.
In addition to the Chinese data, the European Central Bank (ECB) monetary policy meeting also highlights Thursday as the crucial day of the trading week.
Technically, the pair’s sustained trading above 50-SMA and strong RSI line, coupled with a clear break of a descending resistance-turned-support, keeps USD/CNH buyers hopeful.
That said, 50% and 61.8% Fibonacci retracement of the pair’s fall from late July to September 03, respectively around 6.4765 and 6.4890, guard the quote’s short-term advances ahead of a downward sloping trend line from July 27, near 6.4955.
On the contrary, 50-SMA and the previous resistance line, near 6.4550 and 6.4470 in that order, restrict the USD/CNH pair’s short-term downside.
However, a clear break of 6.4470 won’t hesitate to drag the quote towards the monthly low near 6.4245.
USD/CNH: Four-hour chart
Trend: Further recovery expected