#USDCNH @ 6.94755 has surrendered the critical support of 6.9500 as China’s Inflation has landed at 1.6% vs. 1.0% as expected. (Pivot Orderbook analysis)

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• USD/CNH has surrendered the critical support of 6.9500 as China’s Inflation has landed at 1.6% vs. 1.0% as expected.
• Dovish commentary is expected from the PBOC ahead as China’s inflation is in a declining stage.
• A significant improvement in investors’ risk appetite has weighed on the US Dollar index.

The pair currently trades last at 6.94755.

The previous day high was 6.9796 while the previous day low was 6.9568. The daily 38.2% Fib levels comes at 6.9655, expected to provide resistance. Similarly, the daily 61.8% fib level is at 6.9709, expected to provide resistance.

The USD/CNH pair has delivered a downside break of the consolidation formed in a narrow range of around 6.9600 in the Asian session. The downside pressure in the major is a collective effort of the higher-than-projected release of China’s inflation data and improvement in investors’ risk appetite.

China’s annual Consumer Price Index (CPI) has landed at 1.6%, higher than the projections of 1.0% but lower than the prior release of 2.1%. While the monthly figure is showing a contraction of 0.2%. The annual Producer Price Index (PPI) data has contracted by 1.3% while the street was expected a contraction by 1.5%. Economists at TD Securities were expecting that the annual inflation data could decline to 1.5% from the former release of 2.1%.

Though the release is higher than expectations but is in a declining stage and may force the People’s Bank of China (PBOC) to come forward with fresh stimulus packages to infuse pace in the extent of economic activities.

Meanwhile, easing Covid-19 lockdown measures are going to accelerate economic activities in China. Earlier, restrictions on the movement of men, materials, and machines by the administration to curtail infections dampened operations. Now, the reopening of the economy after households’ protest will support economic prospects.

The US Dollar Index (DXY) has slipped sharply to near 104.56 as investors are expecting a slowdown in the interest rate hike by the Federal Reserve (Fed). Also, investors have shrugged off uncertainty over Fed’s interest rate peak guidance.

Technical Levels: Supports and Resistances

USDCNH currently trading at 6.9444 at the time of writing. Pair opened at 6.9614 and is trading with a change of -0.24 % .

The pair is trading below its 20 Daily moving average @ 7.0882, below its 50 Daily moving average @ 7.1634 , below its 100 Daily moving average @ 7.028 and above its 200 Daily moving average @ 6.8082

The previous day high was 6.9796 while the previous day low was 6.9568. The daily 38.2% Fib levels comes at 6.9655, expected to provide resistance. Similarly, the daily 61.8% fib level is at 6.9709, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 6.9522, 6.943, 6.9294
• Pivot resistance is noted at 6.9752, 6.9888, 6.998

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