In contrast to the dollar's general stability, the Chinese yuan encountered pressure on Thursday after disclosing minutes from the Federal Reserve's recent policy meeting. The minutes indicated that there would be no immediate changes to the central bank's cautious posture regarding rate cuts.
FOMC Minutes Update
Market analysts observed that the FOMC minutes failed to provide any unexpected information or definitive guidance for the market. As a result, traders are now anticipating further economic indicators from the US and policy declarations from China at its forthcoming annual parliamentary session in March.
As revealed in the meeting minutes, most Federal Reserve policymakers expressed concern regarding the risks associated with precipitous interest rate cuts during the January 30-31 session. This highlighted the prevailing uncertainty regarding the optimal duration for current borrowing costs.
Data to Look At
A series of business activity surveys, including Purchasing Managers' Index (PMI) data from the US, the UK, and the eurozone, were closely monitored by traders.
The US manufacturing activity showed the fastest growth since September 2022, supported by the stronger order growths. The Flash PMI for February came at 51.50, up from 50.70. Any number above the 50.00 line suggests an expensive mark, which might work as a positive factor for the currency.
Early March marks the impending annual National People's Congress, which is currently the focus of attention in China.
USDCNH Technical Analysis
In the daily chart of USDCNH, the overall market momentum is corrective, backed by a bearish, impulsive trend. In that case, a minor upward correction and a bearish signal from a significant resistance level could be a short opportunity.
In the above image, the dynamic 20-day EMA is closer to the current price, while the RSI starts to gain momentum from the 50.00 level. The MACD Histogram also reached the neutral level, which might work as a confluence bullish factor.
Based on this outlook, the USD CNH price is more likely to extend the bullish correction and reach the 7.3000 resistance level. On the other hand, a bearish correction is possible to the 7.1800 to 7.1400 area, but a daily close below the 7.1400 level could lower the price towards the 7.0800 level.
