The USDCNH currency pair is gaining support to continue its recovery from the start of the week, despite positive news coming from China.

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• USD/CNH picks up bids to extend week-start rebound despite upbeat China.

The pair currently trades last at 7.29199.

The previous day high was 7.279 while the previous day low was 7.2548. The daily 38.2% Fib levels comes at 7.2697, expected to provide support. Similarly, the daily 61.8% fib level is at 7.264, expected to provide support.

USD/CNH fails to justify upbeat China data while extending the week-start recovery towards 7.2900 during early Tuesday, up 0.18% intraday near 7.2880 by the press time. With this, the offshore Chinese Yuan (CNH) justifies the market’s doubts about the Dragon Nation’s capacity to defend the economic recovery from COVID-19 with a slew of stimulus measures. Also fueling the quote could be the firmer US Dollar as the Treasury bond yields improve after the previous day’s US Labor Day holiday.

That said, China’s Caixin Manufacturing PMI for August eased to 51.8 from 54.1 prior.

Elsewhere, China’s Commerce Ministry pledged to support the qualified enterprises to make good use of domestic and overseas listing, as well as bond issuance.

On Monday, China’s readiness for opening up the services industry, as well as developments of the manufacturing activities, joined a slew of measures to cut mortgage rates and infuse more liquidity to keep the Asia-Pacific markets hopeful. On the same line could be the optimism about China’s struggling reality firm Country Garden, after it managed to gain approval from creditors to delay the debt payments of around 3.9 billion Yuan ($536 million).

However, the market’s lack of confidence in the Chinese measures to defend the economy, as well as the recent Sino-American tensions over Taiwan and the US businesses’ discomfort in Beijing, prod the market’s risk-on mood and propel the USD/CNH price.

Additionally, the US Dollar Index (DXY) rebound, backed by the upbeat Treasury bond yields also underpins the USD/CNH upside.

With this, the US 10-year Treasury bond yields rose two basis points (bps) to 4.20% after a holiday-driven inaction while S&P 500 Futures print mild losses amid the market’s cautious mood as traders from the US return after a long weekend.

Looking ahead, the risk catalysts and the US Factory orders for July will be important for fresh impulse.

A 13-day-old falling wedge bullish chart formation, currently between 7.2550 and 7.2910, keeps the USD/CNH buyers hopeful.

Technical Levels: Supports and Resistances

USDCNH currently trading at 7.2882 at the time of writing. Pair opened at 7.2754 and is trading with a change of 0.18% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 7.2839, 50 SMA 7.234, 100 SMA @ 7.1377 and 200 SMA @ 7.0117.

The previous day high was 7.279 while the previous day low was 7.2548. The daily 38.2% Fib levels comes at 7.2697, expected to provide support. Similarly, the daily 61.8% fib level is at 7.264, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 7.2605, 7.2455, 7.2363
• Pivot resistance is noted at 7.2847, 7.2939, 7.3089

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