- Investors are awaiting US/China inflation data for fresh cues.
- The absence of follow-up buying after a Double Bottom formation indicates a lack of strength in the US Dollar.
- Declining 50-EMA adds to the downside filters.
The USD/CNH pair is struggling to extend its recovery move above the critical resistance of 6.8000 in the Asian session. The asset is demonstrating topsy-turvy moves as investors are awaiting the release of the Consumer Price Index (CPI) figures by the United States and China, which are scheduled for Thursday.
The US Dollar Index (DXY) is hovering near the edge of the 103.00 resistance amid a quiet market mood. Also, S&P500 futures are displaying a subdued performance as anxiety soars ahead of inflation data.
On an hourly scale, the major picked strength after forming a Double Bottom chart pattern that indicates a reversal post sensing weak selling interest on testing of the previous lows around 0.6760. However, the absence of follow-up buying conveys the rebound move as mere a pullback, which can be capitalized by investors for building fresh shorts.
The asset is struggling to shift auction above the 20-period Exponential Moving Average (EMA) at 0.6780, which indicates a lack of strength in the US Dollar. Also, the 50-EMA below 0.6800 is declining, which adds to the downside filters.
Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which indicates consolidation head.
For an upside move, USD/CNH needs to surpass the 50-EMA at around 6.8000, which will drive the asset toward January 9 high at 6.8292, followed by January 6 high at 6.8926.
On the contrary, a south-side move below Tuesday’s low at 6.7586 will drag the asset toward July 29 low at 6.7282 and round-level support at 6.7000.
USD/CNH hourly chart
