USD/CNH Price Analysis: Yuan pair extends pullback from 7.2370-80 monthly resistance after China inflation

USD/CNH prints the first daily loss in four after China inflation data for July.
Improvement in PPI supersedes downbeat CPI data to allow Yuan to pare recent losses.
MACD, RSI keep buyers hopeful of poking multi-month-old descending resistance line.
21-DMA, fortnight-old rising support line restricts immediate downside of USD/CNH.

Anil Panchal FXStreet

USD/CNH renews its intraday low near 7.2220 while reversing from a one-month-old horizontal resistance during early Wednesday. In doing so, the offshore Chinese Yuan (CNH) pair gives more importance to the improvement in the factory-gate inflation than the consumer price increase, as well as cheer the market’s stabilization, while snapping a three-day losing streak.

That said, China’s headline inflation gauge, namely the Consumer Price Index (CPI), declines to -0.3% YoY versus -0.4% YoY expected and 0.0% prior whereas the Producer Price Index (PPI) improves to -4.4% YoY compared to -4.1% YoY market forecasts and -5.4% previous readings.

Technically, the latest pullback remains elusive amid bullish MACD signals and an upbeat RSI (14) line.

Also challenging the short-term USD/CNH bears are the 21-DMA and a fortnight-long rising support line, respectively near 7.1815 and 7.1760.

Following that, the upward-sloping trend line from early May and February, close to 7.1480 and 7.0990 in that order, will be in the spotlight.

On the contrary, a daily closing beyond the aforementioned monthly horizontal resistance near 7.2370-80 could quickly propel the USD/CNH pair towards a descending trend line from late October 2022, surrounding 7.2730 by the press time.

In a case where the offshore Chinese Yuan manages to cross the 7.2730 hurdle, the yearly top marked in June near 7.2860 will act as the last defense of bears.

USD/CNH: Daily chart

Trend: Further upside expected

Additional important levels

Overview
Today last price	7.2272
Today Daily Change	-0.0102
Today Daily Change %	-0.14%
Today daily open	7.2374

Trends
Daily SMA20	7.1792
Daily SMA50	7.1837
Daily SMA100	7.0598
Daily SMA200	7.0014

Levels
Previous Daily High	7.2512
Previous Daily Low	7.199
Previous Weekly High	7.213
Previous Weekly Low	7.133
Previous Monthly High	7.2744
Previous Monthly Low	7.116
Daily Fibonacci 38.2%	7.2313
Daily Fibonacci 61.8%	7.219
Daily Pivot Point S1	7.2072
Daily Pivot Point S2	7.177
Daily Pivot Point S3	7.155
Daily Pivot Point R1	7.2594
Daily Pivot Point R2	7.2814
Daily Pivot Point R3	7.3116

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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