USD/CNH Price Analysis: Pierces key resistance around 7.2400 as China PMI softens

• USD/CNH crosses 50-SMA, weekly resistance line on downbeat China Caixin Services PMI for June.
• RSI rebound, receding bearish bias of MACD add strength to upside bias for the Yuan pair.
• Bears need validation from two-month-old rising support line, 100-SMA limits short-term downside.
• Bulls aim for fresh multi-month high ahead of Fed Minutes.

USD/CNH snaps three-day losing streak by refreshing intraday high at 7.2450 amid early Wednesday in Asia. In doing so, the offshore Chinese Yuan (CNH) pair takes clues from the market’s risk-off mood and the downbeat China PMI data ahead of the Federal Open Market Committee (FOMC) Minutes for the June meeting.

China’s Caixin Services PMI for June traced its manufacturing counterpart while falling to 53.9 versus 57.1 prior. Earlier in the week, China’s Caixin Manufacturing PMI eased to 50.5 for the said month, versus 50.9 prior and 50.2 market forecasts. On the same line, China’s official PMIs for June also appeared less impressive and allowed the USD/CNH to refresh the eight-month high in the last week.

Technically, the USD/CNH pair’s upside break of a downward-sloping resistance line from June 30 and the 50-SMA, respectively near 7.2400 and 7.2430, keeps the buyers hopeful of revisiting the multi-month top marked the last week around 7.2860.

Adding strength to the upside bias is the RSI (14) line’s latest rebound, as well as the receding bearish bias of the MACD signals.

It’s worth noting that tops marked in November around 7.2600 and 7.2800 can prod the USD/CNH bulls on their way to the previous yearly high of around 7.3750.

On the contrary, the 50-SMA and the resistance-turned-support can limit the immediate downside of the USD/CNH pair to around 7.2430 and 7.2400 in that order.

However, the 100-SMA and an upward-sloping support line from early May, close to 7.2050 and 7.1880 respectively, appear tough nuts to crack for the pair sellers afterward. Following that, the 200-SMA support of near 7.1540 acts as the last defense for the buyers.

USD/CNH: Four-hour chart

Trend: Further upside expected