USD/CNH: Risk of short-term downtrend on failure to defend support at 7.16 – SocGen

Economists at Société Générale analyze USD/CNH technical outlook.

A pause is not ruled out

USD/CNH has experienced a relentless uptrend after breakout from a range-bound consolidation last month. It has reached the potential resistance of 7.25/7.26 representing the peak of November 2022 which is also the upper limit of a steep ascending channel. Daily MACD has turned flat; this is not a reversal signal however a pause is not ruled out. 

The 20-DMA near 7.16 should be a potential support. Only if the pair fails to defend it, there could be risk of a short-term downtrend.