USD/CNH hits one-week low of 6.7380

• The technical correction in the USD/CNH pair has gathered steam.
• The currency pair has hit a one-week low of 6.7380.

The USD/CNH (offshore Yuan exchange rate) fell to 6.7380 today - the lowest level since July 19 and was last seen trading at 6.75.

The 1.5 percent drop from the recent high of 6.8443 could be associated with overbought conditions, as shown by the relative strength index.

Further, the People's Bank of China announced a stronger fix this Thursday morning, helping the corrective rally in the offshore exchange rate gather pace.

That said, the relief could be short-lived if the US-China currency war escalates. However, for now, the recovery in CNH could help China proxies, related currencies, and base metals push higher against the greenback.

USD/CNH Technical Levels

The bearish divergence of the 14-day relative strength index (RSI) and stochastic favors a deeper pullback in the USD/CNY pair.

Resistance: 6.7636 (200-hour moving average), 6.7957 (100-hour moving average), 6.8197 (July 24 resistance on the hourly chart).

Support: 6.7380 (session low), 6.7329 (July 3 high), 6.5999 (July 10 low).