USD/CNH Technical Analysis: Edging to Monthly Range Floor

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Talking Points:

• USD/CNH Technical Strategy: Flat
• US Dollar edges toward monthly range support vs. Yuan as volatility fizzles
• Absence of an actionable trade setup argues against establishing exposure

The US Dollar has slipped toward the bottom of its monthly range after edging below trend line support against the Chinese Yuan in offshore trade. Momentum has increasingly withered however, with ATR readings pointing to the lowest volatility in almost five months.

Near-term support is at 6.4529, the 23.6% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a challenge of the 38.2% level at 6.4058. Alternatively, a push back above the trend line and the April 6 high at 6.4937 sees the next upside barrier at 6.5291, the March 25 top.

Inconclusive positioning offers no actionable trading opportunities for now as prices wait for a clear directional catalyst to re-ignite volatility. We will stand aside, waiting for the pair to offer an actionable trading opportunity.

What is in store for the markets in the second quarter? See our forecast here !