The USD Index has witnessed traction amid a spike in Covid-19 cases in China. (Pivot Orderbook analysis)

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• The USD Index has witnessed traction amid a spike in Covid-19 cases in China.
• US Health Officials will impose mandatory COVID-19 tests on travelers from China.
• November’s Pending Home Sales showed the lowest reading in 20 years amid higher interest rates by the Fed.

The pair currently trades last at 104.38.

The previous day high was 104.56 while the previous day low was 103.84. The daily 38.2% Fib levels comes at 104.28, expected to provide support. Similarly, the daily 61.8% fib level is at 104.11, expected to provide support.

The US Dollar Index (DXY) has sensed a mild selling pressure above 104.50 after a V-shape recovery move from the crucial support of 103.90. The USD Index witnessed a sheer responsive buying action after the spike in Covid-19 cases in China triggered a risk aversion theme in the global market. This led to a sheer fall in risk-sensitive assets like S&P500, which extended its downside journey with sheer momentum. While the return on 10-year US Treasury bonds climbed to 3.90%.

Chinese administration went to dismantle tight Covid-19 restrictions to reopen the economy to the fullest after levying curbs on the movement of men, materials, and machines for a longer period. The motive behind picking pace in the economy’s reopening was to ease supply chain disruptions to accelerate international trade. However, this resulted in a spike in Covid-19 infections and other countries returned to safety measures for travelers from China.

Health officials of the United States cited that the economy will impose mandatory COVID-19 tests on travelers from China, which has trimmed investors’ risk appetite dramatically and has strengthened the US Dollar.

The lack of economic data this week due to the festive mood has left a few triggers for the direction of the FX market. Therefore, investors are focusing on a handful of economic events. On Wednesday, the National Association of Realtors published the Pending Home Sales, which declined by 4% on a monthly basis in November while the street was expecting an expansion of 0.6%.

“Pending home sales in November 2022 recorded the second-lowest monthly reading in 20 years as interest rates by the Federal Reserve (Fed) have climbed to 4.5%, drastically cutting into the number of contract signings to buy a home,” the National Association of Realtors said.

Technical Levels: Supports and Resistances

USDCNY currently trading at 104.38 at the time of writing. Pair opened at 104.52 and is trading with a change of -0.13 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 104.62, 50 SMA 106.05, 100 SMA @ 108.66 and 200 SMA @ 106.66.

The previous day high was 104.56 while the previous day low was 103.84. The daily 38.2% Fib levels comes at 104.28, expected to provide support. Similarly, the daily 61.8% fib level is at 104.11, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 104.05, 103.58, 103.33
• Pivot resistance is noted at 104.77, 105.03, 105.49

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