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US Dollar and USD/CNH Outlook

  • US Dollar index and USD/CNH charts and analysis

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USD/CNH and DXY – Price Action

On August 4 the DXY opened with a downward gap for the second week in a row, indicating to the seller’s intention to take the initiative and lead the price. On Friday the weekly candlestick closed with 0.6% loss.

In turn, last week USD/CNH rallied to its highest level in nearly ten years breaking above 7.0000 - a highly important psychological level in the Market.

The Relative Strength Index (RSI) remained flat at 50 on the DXY and has not been able yet to cross below, indicating to the seller’s lack of momentum to kick start a downtrend move. On the other hand, since the start of the month (RSI) has been moving in the overbought territory on USD/CNH emphasizing the strength of the uptrend momentum.

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Dollar Index DAILY PRICE CHART (May 8, 2017 – AUG 12, 2019) Zoomed out

US Dollar index daily price chart 12-08-19 Zoomed out

Dollar Index DAILY PRICE CHART ( June 1– AUG 12, 2019) Zoomed out

US Dollar index daily price chart 12-08-19 Zoomed in

Looking at the daily chart, we notice since Tuesday the DXY has been trying to move to the higher trading zone 9,722.0 – 9,774.5. However, the index has not succeeded yet to close above the low end of the zone.

Thus, a close below the low end of the zone, may send the price towards 9,648.0. Nonetheless, the weekly support levels underscored on the chart (zoomed in) need to be considered. See the chart to know more about the lower trading zone and the weekly support sellers would encounter in a further bearish move.

On the filp-side, a close above the high end of the zone, could push the price towards 9,842.0. Although, the weekly resistance levels marked on the chart would be worth monitoring. See the chart to know more about the higher trading zone with the weekly resistance levels buyers would face in a further bullish move.

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USD/CNH DAILY PRICE CHART (June 1, 2018 – AUG 12, 2019) Zoomed out

USDCNH price daily chart 12-08-19 Zoomed out

USD/CNH DAILY PRICE CHART (March 21 – AUG 12, 2019) Zoomed in

USDCNH price daily chart 12-08-19 Zoomed in

Looking at the daily chart, we notice on Tuesday USD/CNH rebounded at 7.1400 then slipped below 7.1000 handle. Currently, the pair is moving in the trading zone 7.0000 – 7.1400.

It’s worth noting the importance of the uptrend line originated from Aug 15 -2018 high at 6.9587. Hence, if the price breaks and remains below this uptrend line i.e. Below Fib extension 161.80% at 7.0534, this could send the USD/CNH towards the low end of current trading zone.

Further close below the low end of the trading zone may send the price towards 6.9500. However, the weekly support levels underlined on the chart (zoomed in) should be kept in focus.

On the other hand, any close above the high end of the zone, could push the price higher towards Fibonacci extension 261.80 % at 7.2000.

Read More: CNH vs CNY: Differences Between the Two Yuan

Written By: Mahmoud Alkudsi

Please feel free to contact me on Twitter: @Malkudsi