- USD/CNH resumes its downtrend on the back of the bearish sentiment surrounding the USD.
- The technical setup favors bearish traders and backs the case for a further depreciating move.
- Any attempted recovery could be seen as a selling opportunity and remain capped near 7.1800.
The USD/CNH pair attracts fresh sellers following the previous day’s modest uptick and touches a fresh year-to-date low, around the 7.1525 area during the Asian session on Thursday. Moreover, a bearish technical setup backs the case for further near-term depreciation for spot prices.
The recent breakdown below a technically significant 200-day Simple Moving Average (SMA) was seen as a fresh trigger for the USD/CHF bears. Moreover, the occurrence of a death cross on the daily chart (50-day SMA crossing below 200-day SMA) and an intraday breakdown below the 7.1715 horizontal support add credence to the negative outlook.
Furthermore, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone, suggesting that the path of least resistance for the USD/CNH pair remains to the downside. Hence, a subsequent slide toward testing the next relevant support, around the 7.1450-7.1445 area, looks like a distinct possibility.
On the flip side, recovery attempts might now confront stiff resistance near the 7.1715 horizontal support breakpoint. Any further move up could be seen as a selling opportunity and runs the risk of fizzling out near the overnight swing high, just ahead of the 7.1800 mark. A sustained strength beyond the latter, however, could pave the way for additional gains.
USD/CNH daily chart
