USD/CNH: Bulls attack September 2019 top as US increases hardships for China

• USD/CNH remains on the front foot above 7.1800.
• US House passes bill to punish those involved in the Xinjiang case, probes the Court of International Trade’s decision favoring China.
• US President Trump signaled sanctions to arrive by the week’s end.
• China’s anticipated recovery from the pandemic fails to disappoint the buyers.

Despite stepping back from the intraday high of 7.1878 to 7.1780, USD/CNH remains positive during Thursday’s Asian session. With the US-China tussle in full steam, the pair nears the September 2019 high.

Having initially refrained from the sanctions on China, US policymakers are increasing hardships for the dragon nation. In addition to the US House of Representative’s recent bill to punish Chinese diplomats involved in the Xinjiang case, markets are anticipating a few more sanctions by the end of the week. The reason is Wednesday’s signal by US President Donald Trump and Secretary of State Mike Pompeo.

In addition to enforcing the sanctions, the Trump administration is also challenging the US Court of International Trade’s decision to reinstate tariff exception for certain solar panel imports from China and elsewhere.

Furthermore, US President Trump is step-by-step removing hurdles from his re-election and is making it hard for the Asian major to remain positive for long.

Amid all these pessimism, Bloomberg came out with analysis, citing early data, to convey that China is overcoming the coronavirus (COVID-19) crisis-led slump.

However, traders seem to pay a little attention to fearsome headlines. While portraying the mood, Japan’s NIKKEI gain over 2.0% whereas the US 10-year Treasury yields stay positive around 0.70%.

Although the political fight with the US can keep the Chinese currency under pressure, for now, expectations of dwindling trade surplus and no major Foreign Direct Investment (FDI) also could propel the USD/CNH pair.

For immediate direction, updates concerning the current fight as well as US data should be watched closely.

Technical analysis

Bulls targeting 7.2000 psychological magnet need to cross September 2019 pear of 7.1967, else risks of the pair’s pullback to March month high close to 7.1650 can’t be ruled out.