USD/CNH Price Analysis: Approaches five-month high around 7.0750

• USD/CNH is marching towards a five-month high at 7.0750 amid strength in the USD Index.
• The USD Index has shown resilience despite a further delay in US debt-ceiling raise.
• USD/CNH has comfortably shifted above the horizontal resistance plotted from at 7.0157.

The USD/CNH pair has turned sideways after a decent upside move above 7.0620 in the Asian session. The asset is looking to recapture a five-month high at 7.0748 as the US Dollar Index (DXY) has defended the downside bias. The USD Index is approaching the crucial resistance of 103.50 despite the further delay in US debt-ceiling raise as Monday’s face-to-face meeting between US President Joe Biden and House of Representatives Kevin McCarthy ended without a decision.

S&P500 futures are holding gains generated in early Asia amid positive development in the United States-China relationship. China's Commerce Minister Wang Wentao hosts a seminar for US firms investing in China on Monday and promised to provide accurate and efficient service guarantees for foreign-funded enterprises.

On Tuesday, preliminary US S&P PMI (May) data will remain in the spotlight. Manufacturing PMI is seen softening to 50.0 from the former release of 50.2. While Services PMI is expected to remain steady at 53.6.

USD/CNH has comfortably shifted above the horizontal resistance plotted from 22 December 2022 high at 7.0157, which has turned into a cushion for the US Dollar bulls. The asset is expected to discover upside move ahead. A potential resistance is placed from 22 November 2022 low at 7.1316.

The 10-period Exponential Moving Average (EMA) at 7.0121 is providing support to the US Dollar bulls.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, showing no signs of divergence and an oversold situation.

For further upside, a decisive break above May 19 high at 7.0750 will drive the asset toward the round-level resistance at 7.1000 followed by 22 November 2022 low at 7.1316.

On the flip side, a downside move below May 17 low at 6.9925 would fade the upside bias and will drag the asset toward May 16 low at 6.9554 and March 30 high at 6.9123.

USD/CNH daily chart