The USDCNH currency pair is gaining buying interest at a rate of 7.16781, continuing its rebound from the lowest level seen in a month on Friday.

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• USD/CNH picks up bids to extend Friday’s recovery from one-month low.

The pair currently trades last at 7.16781.

The previous day high was 7.1618 while the previous day low was 7.1226. The daily 38.2% Fib levels comes at 7.1469, expected to provide support. Similarly, the daily 61.8% fib level is at 7.1376, expected to provide support.

USD/CNH renews intraday high near 7.1720 after China fails to defy market’s downbeat concerns with its mixed data published early Monday. Also fueling the offshore Chinese Yuan (CNH) pair could be the US Dollar’s corrective bounce amid downbeat sentiment, as well as the People’s Bank of China’s (PBoC) defense of the Medium-term Lending Facility (MLF) rates.

China’s second quarter (Q2) 2023 Gross Domestic Product (GDP) came in at 0.8% QoQ versus 0.5% market forecasts and 2.2% prior whereas the GDP YoY figures rose past the previous readings of 4.5% to 6.3%, versus analysts’ estimations of 7.3%. Further, the Industrial Production growth jumped to 4.4% YoY in June, compared to 2.7% expected and 3.5% prior, whereas the Retail Sales slumped to 3.1% from 12.7% prior and 3.2% market consensus. It should be noted that China’s June survey-based Jobless Rate for 24-year olds jumped to the record high of 21.3%.

Elsewhere, the International Monetary Fund (IMF) cited the fears of short-term firmer inflation clues to underpin the US Dollar Index rebound from the multi-month low, which in turn allowed USD/CNH to recover. Adding strength to the pair’s corrective bounce are the political fears surrounding the China, flagged by comments from New Zealand Prime Minister (NZ) Chris Hipkins and US Treasury Secretary Janet Yellen.

Furthermore, US climate envoy John Kerry has arrived at the Beijing Hotel in the Chinese capital on Monday for talks with his Chinese counterpart Xie Zhenhua, per Reuters. The policymaker’s initial comments were grim as he said that it is imperative that China and the US make real progress in the little more than 4 months left before COP28.

Additionally, Friday’s US data and the Fed blackout period also allow the USD/CNH to recover. That said, the preliminary reading of the University of Michigan’s (UoM) Consumer Confidence Index rose to 72.6 from 64.4 in June, versus the market’s expectations of 65.5. Further details suggested that the one-year and 5-year consumer inflation expectations per the UoM survey edged higher to 3.4% and 3.1% in that order versus 3.3% and 3% respective priors. Before that, the US Consumer Price Index (CPI) and Producer Price Index (PPI) for June dropped to 3.0% and 0.1% on a yearly basis from 4.0% and 0.9% YoY in that order, which in turn drowned the US Dollar.

While portraying the mood, the S&P500 Futures print mild losses whereas the US Treasury bond yields remain sidelined amid Japan’s holiday.

Moving on, the US NY Empire State Manufacturing Index for June may direct intraday moves of the USD/CNH pair but major attention will be given to the US Retail Sales and Sino-US headlines.

Despite bouncing off the 50-DMA, at 7.1320 by the press time, the USD/CNH bulls need validation from the support-turned-resistance line stretched from early June, close to 7.1800 at the latest, to restore the market’s confidence.

Technical Levels: Supports and Resistances

USDCNH currently trading at 7.1686 at the time of writing. Pair opened at 7.156 and is trading with a change of 0.18% % .

The pair is trading below its 20 Daily moving average @ 7.2164, above its 50 Daily moving average @ 7.127 , above its 100 Daily moving average @ 7.0146 and above its 200 Daily moving average @ 7.0063

The previous day high was 7.1618 while the previous day low was 7.1226. The daily 38.2% Fib levels comes at 7.1469, expected to provide support. Similarly, the daily 61.8% fib level is at 7.1376, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 7.1319, 7.1076, 7.0927
• Pivot resistance is noted at 7.1711, 7.186, 7.2103

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