USDCNH Retesting Broken Support

USDCNH Has been trading in a narrow bearish channel over recent week, moving lower from the 6.5805 weekly highs, breaking below the 6.4018 level support to lows of around 6.3500. price is currently correcting higher but has been capped by the bear channel top and the retest of the 6.4018 level for now. Firm bullish divergence has been noted in both the MACD and RSI indicators over the recent decline. Should price break back above the 6.4018 level, there is scope for a sharp move higher towards the 6.4964 level.

Key Data to Watch

The Dollar has remained subdued over recent weeks as, despite some better than expected data, a few misses on key readings have kept Fed tightening expectations from really lifting off. However, May CPI this week could change that. Given the firm lift seen over the prior month, if May’s data comes in well above forecasts, this could fuel sharp unwinding of short positions in USD. A lift in US CPI expectations would also have repercussions for the broader risk environment, weakening CNH through that channel also.