USD/CNH slumps to one-week low below 6.6700 as China eases covid restrictions for travelers

• USD/CNH plummets almost 200 pips on upbeat headlines from China.
• China reduces quarantine time for international travelers, vows timely policy measures to cope with economic risks.
• Sellers remain cautious as G7 updates challenge risk-on mood.
• US CB Consumer Confidence, Fedspeak eyed for fresh impulse.

USD/CNH takes offers to renew intraday low around 6.6685 as sellers cheer upbeat headlines from China during early Tuesday morning in Europe.

“China will halve to seven days its COVID-19 quarantine period for visitors from overseas, with a further three days spent at home, health authorities said on Tuesday,” per Reuters.

Earlier in the day, Ou Hong, Deputy Secretary-General at the National Development and Reform Commission (NDRC) told a news conference, per Reuters, “The government will implement its existing support measures while improving its policy toolbox.”

The news also mentioned, “China will roll out tools in its policy reserve in a timely way to cope with more economic challenges, as COVID-19 outbreaks and risks from the Ukraine crisis pose a threat to employment and price stability.”

On a different page, the Group of Seven (G7) officials signaled potential price caps for Russian oil and gas, which in turn challenges the latest risk-on mood. The news, however, is already known and failed to renew the US dollar strength.

That said, the greenback gauge drops for the third consecutive day, down 0.11% around 103.84 at the latest, as market players await US CB Consumer Confidence for June, prior 106.4.

It’s worth noting that the mixed US data published on Monday challenge the Fed’s hawkish path and exert downside pressure on the greenback. On Monday, US Durable Goods Orders rose to 0.7% in May, versus 0.1% expected and 0.4% prior. That said, the widely tracked Nondefense Capital Goods Orders ex Aircraft also cross 0.3% market forecasts and previous readings to increase by 0.5% during the stated month. Further, the US Pending Home Sales also surprised the USD bulls with 0.7% MoM figures for May versus -3.7% expected and -4.0% prior. The YoY figures, however, came in negative to -13.6% versus -9.8% prior. Further, Dallas Fed Manufacturing Business Index for June dropped to the lowest level since May 2020, to -17.7 versus -3.1 forecasts and -7.3 prior.

Moving on, US sentiment data and Fedspeak may entertain traders ahead of Wednesday’s ECB Forum as the key central bankers are scheduled to debate the monetary policies.

Technical analysis

USD/CNH bears attack a two-week-old support line near 6.6720, a daily closing below the same will direct the quote towards the monthly low near 6.6170.