USD/CNH reaches a three-week low of $6.3300 for softer USD

CNH drops for fourth consecutive day to renew monthly top.

USD/CNH reaches a three-week low of $6.3300 for softer USD
  • There is room for further easing from PBOC. Strong FDI in China favors CNH buyers. The Sino-American trade tussles test both the bears and the bears.

  • USD tracks yields that are lower amid uncertainty about Fed's next move.

  • Fedspeak and G20 data are in focus.

USD/CNH is still under pressure around the weekly bottom. This includes the lowest levels since January 26th. However, it rose to $6.3300 during Thursday’s Asian session.

The offshore Chinese Yuan (CNH), which is based in China, has posted a four-day decline while cheering the US dollar's downbeat amid mixed concerns about China.

The People's Bank of China's (PBOC), with its softening inflation and positive Foreign Direct Investment (FDI), figures for January, can maintain their dovish bias. Despite this, China's Producer Price Index and China's Consumer Price Index (CPI), both reported lower numbers on Wednesday. However, Reuters industry share shares suggest that there will be more FDI and potential for increased infrastructure spending.

The Wall Street Journal stated that, "To the extent China's unfair and non-market practices and policies persist, the United States will use domestic trade strategies strategically as necessary to attain a more level playing ground with China for US workers, and businesses."

The US Federal Open Market Committee's (FOMC) Minutes are weighing on US Treasury yields. These concerns, along with doubts about the de-escalation in Russia-Ukraine tensions, also affect stock futures. This causes US Dollar Index to post a three-day downtrend at 95.78.

Despite the fact that optimism about China's economic performance is not in line with the trade position, the PBOC versus battle may be a boon for USD/CNH bears. To make short-term moves, however, second-tier US economics (mainly the housing market numbers, unemployment claims, and Philadelphia Fed Manufacturing Survey) will be joining Fedspeak and updates of G20.

Analyse technique

Although the USD/CNH pair's February low of $6.3490 provides short-term upside, bears will have a hard time cracking a downward-sloping trendline starting May 31, 2021 at $6.3215 (press time).