- USD/CNH extends its losses followed by the support at 23.6% Fibonacci retracement level at 7.1985.
- A break below the 14-day EMA could lead the pair to test the weekly low at 7.1748.
- Technical indicators suggest a bullish momentum to revisit the week’s high at 7.2322.
USD/CNH extends its losses for the second successive session, trading lower near the 7.2100 psychological level during the Asian session on Friday. The People's Bank of China (PBoC) has consistently set the reference rate at levels lower than what modeled estimates suggest. Additionally, strategic moves have been made to bolster the offshore Yuan (CNH) by selling the US Dollar (USD) in the open market.
The 23.6% Fibonacci retracement level at 7.1985 acts as an immediate support followed by the 14-day Exponential Moving Average (EMA) at 7.1899. A firm break below the 14-day EMA could put downward pressure on the USD/CNH pair to navigate the support region around the 38.2% Fibonacci retracement level at 7.1772 aligned with the week’s low at 7.1748.
The technical analysis of the Moving Average Convergence Divergence (MACD) for the USD/CNH pair reveals a bullish outlook. The MACD line is situated above the centerline and displays divergence above the signal line. This configuration suggests a potential uptrend in the market. With this bullish sentiment, there is a possibility that the pair may revisit the week's high at 7.2322.
Furthermore, the 14-day Relative Strength Index (RSI), a lagging indicator, is positioned above the 50 mark. This suggests a confirmation of stronger momentum for the USD/CNH pair. With this increased momentum, there is potential for the bulls to strengthen their position, potentially surpassing the week's high and exploring levels around the psychological mark at 7.2500.
USD/CAD: Daily Chart
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