Forex Daily Recap – Sharp Pullbacks Pushed USD/CNY pair Below 50% Fib Level

USD/CNY

The Chinese Yuan pair had struggled hard in the last few sessions to stay above 6.8772 level or 38.2% Fibonacci level. Somehow, the bulls couldn’t hold gains for long. The USD/CNY pair underwent a sharp pullback on Wednesday reaching near 6.8678 support mark. The significant 200-day and 100-day SMA had made attempts to stop the pair’s downward. However, the efforts went in vain, allowing the pair to move even below the 50% Fibonacci benchmark.

During the late Asian session, the pair breached the 6-day old ascending slanted support line. From such a negative movement, most of the Yuan pair traders must have already got hints of an upcoming strong downtrend. Meantime, the Chinese June (both YoY & MoM) Consumer Price Index (CPI) data reported in-line with the previous figures. Nevertheless, the June YoY Producer Price Index (PPI) came out near 0.0%, 0.3% lower than the market expectation. The Relative Strength Index (RSI) slipped drastically below 24 level, showing strong seller dominance.

GBP/USD

Last night, the Cable had showcased a strong plunge rally, breaking the sturdy 1.2508 support mark. Anyhow, the picture was quite different today. The drowning GBP/USD pair found stoppage near 1.2440 support level and took a U-turn, rebounding upwards. The Cable bulls gathered some excellent amount of strength, making a breakout through a major counter trendline. Notably, the near-term 50-day SMA seemed to move hand-in-hand with the pair. However, any positive movement above 1.2540 mark would have activated the 100-day and 200-day SMA confluence. The RSI also shoot up from 29 level to more than 60 level, revealing increased buying interest among the market participants.

On the contrary, the economic docket displayed some adverse UK data. Both the May Manufacturing Production and Industrial Production reported lower than street estimates. In the meanwhile, the UK May MoM GDP data came around 0.3% over the previous -0.4%. This GDP data seemed to help the pair keep the uptrend intact.

US Dollar Index

The Greenback showcased an overall weak performance on Wednesday’s trading session. The downtrend in the US Dollar Index got triggered in the early hours of the day, somewhere near 07:00 GMT. Serious concerns came in as the USD Index breached and moved below the 13-day old ascending slanted support line. In the North American session, the Greenback appeared to descend, aiming the 100-day and 200-day SMA confluence. The Index has already moved beneath the 50-day SMA, appealing continuity of downtrend in the short term period.

Today, Fed’s Chair Powell mentioned in his testimony that, “Inflation has been running below the Federal Open Market Committee’s (FOMC) symmetric 2 percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook”. The Fed Chief also added that the Bank would “act as appropriate” to sustain economic growth. 

USD/CAD

After opening near 1.3131 level on Wednesday, the Loonie pair remained muted until the European session. The USD/CAD pair showcased a seesawed performance post-12:00 GMT. During the day, the pair marked the lowest point near 1.3068 level and the day’s high near 1.3143 level. As expected, the BoC kept the Interest Rates unchanged again at 1.75%.  Meanwhile, the Crude prices upsurged on the back of positive EIA Crude Stocks Change report computed since July 5.