USD/CNH Price Analysis: Grinds near record high amid PBOC inaction

• USD/CNH seesaws around all-time high, struggles to defend bulls of late.
• PBOC left benchmark one-year LPR unchanged at 3.65%.
• 13-day-old resistance line guards immediate upside, bears remain absent beyond two-month-old support.
• Overbought RSI, nearness to short-term key resistances suggest that bulls are running out of steam.

After refreshing the record high of 7.2790 earlier in the day, USD/CNH remains sidelined near 7.2660 during Thursday’s Asian session. In doing so, the offshore Chinese yuan (CNH) pair takes clues from the People’s Bank of China’s (PBOC) inaction, as well as overbought RSI (14) near the short-term key resistance.

“China kept its benchmark lending rates unchanged for a second straight month on Thursday, in line with expectations, as authorities held off unleashing more monetary stimulus to avoid stark policy divergence with other major economies,” said Reuters. The news also mentioned that PBOC kept one-year and five-year loan prime rates (LPR) unchanged at 3.65% and 4.30% respectively.

Also read: China left the one-year loan prime rate unchanged at 3.65%, five-year loan prime rate unchanged at 4.30%

Technically, USD/CNH has little room to the upside as overbought RSI (14) challenges the bulls near an upward-sloping resistance line from October 03, around 7.2930 by the press time,

Following that, an ascending resistance line from May, around 7.3380 will gain the USD/CNH buyer’s attention.

On the flip side, 21-DMA and a two-month-old support line, respectively near 7.1555 and 7.1220, restrict the short-term downside of the USD/CNH pair, a break of which could convince sellers to refresh the monthly low, around 7.0130 at the latest.

USD/CNH: Daily chart

Trend: Pullback expected