USD/CNH: Remain Under Pressure Despite a Modest Rebound
George Lam September 27, 2020 10:03 PM
Despite a rebound in the U.S. dollar, USD/CNH longer-term technical outlook remains bearish....
On Friday, the ICE U.S. Dollar Index climbed to a 2-month high of 94.64, amid continued short covering. USD/CNH rebounded 0.6% last week, halting an 8-week decline.
This week, investors will focus on the release of China's September official Manufacturing PMI (a slight improvement to 51.3 expected), Non-manufacturing PMI (edging down to 54.7 expected) and Caixin Manufacturing PMI (flat at 53.1 expected), all due on Wednesday.
On a daily chart, USD/CNH remains on the downside despite a modest rebound. The pair has formed a bearish double-top pattern and has broken below the neckline, signaling a bearish bias. The upside potential of the recent rebound is expected to be limited by the nearest resistance at 6.9200, which is the 38.2% Fibonacci retracement of the decline started in May, and a break below the nearest support at 6.7400 might trigger a further decline to test the next support at 6.6000. Alternatively, breaking above 6.9200 would suggest the pair has stabilized and the next resistance at 7.0200 may be challenged.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.