USD/CNH Forecast Ahead of a Loaded Week of News Triggers

Summary:
• The hawkish statements of some members of the Fed is triggering additional strength on the USD/CNH pair ahead of next week's loaded calendar.

The USD/CNH pair is up 0.54% on the day. This comes as comments by several Fed officials heighten market expectations of a rate hike in September. As a result, the USD/CNH touched its highest level in three months this Friday. The last time the pair hit the 6.83870 price mark was 15 May. 

The weak Chinese data released early in Monday’s Asian session triggered the pair’s strong performance this week. The decline below expectations of the Chinese fixed asset investments, industrial production, and retail sales triggered a 1.17% slump in the Chinese Yuan against the US Dollar.

The intervention by the People’s Bank of China led to some strengthening on Tuesday. However, the hawkish FOMC minutes on Wednesday initiated the three-day rise in the USD/CNH, culminating in today’s gains. 

Additional fundamental triggers will impact the pair in the coming days as next week presents a loaded economic calendar. These will come from the US side of the equation, with flash manufacturing/services PMI data coming up on Monday and Tuesday.

Thursday, 25 August will see the US GDP data hit the newswires along with the start of the Jackson Hole Symposium, which features several Fed policymakers giving speeches. Friday is the day the Core PCE Price Index will be released. It is also the last day of the Jackson Hole Symposium. Here is the USD/CNH outlook heading into next week.

USD/CNH Forecast

The price action is testing the 6.83870 resistance. A break above this level targets the 6.90969 resistance, where the role-reversed previous low of 9 March 2020 is located. If there is a further advance on the pair, the bulls can expect to touch down at 6.96589 (10 June 2019 and 11 March 2020 highs). 

On the other hand, rejection at the current resistance sets off a potential drop to the 6.78547 support (27 May high and 16 August low). Below this level, the 10 May and 10 August lows at 6.71845 become additional downside targets before 6.64629 enters the mix as a three-month low if there is a deeper correction.  

USD/CNH: Daily Chart