USD/CNH Price Analysis: Hits fresh YTD peak, ascending channel favours bullish traders

USD/CNH scales higher for the second straight day and climbs to a fresh YTD top on Monday.
The formation of an ascending channel favours bulls and supports prospects for further gains.
A slightly overbought RSI on the daily chart might cap any further upside, for the time being.

The USD/CNH pair gains some positive traction for the second successive day and climbs to its highest level since November 2022, around the 7.1575 region during the Asian session on Monday.

The upward trajectory witnessed over the past four weeks or so has been along an ascending channel and points to a well-established bullish trend. This, along with the recent breakout through the 7.0000 psychological mark, supports prospects for a further near-term appreciating move. That said, the Relative Strength Index (RSI) on the daily chart has moved on the verge of breaking into the overbought territory and warrants some caution.

Hence, any subsequent move up is likely to confront stiff resistance and remain capped near the top end of the aforementioned trend channel, currently pegged around the 7.1765-7.1770 region. A sustained strength beyond, however, will be seen as a fresh trigger for bulls and allow the USD/CNH pair to reclaim the 7.2000 mark for the first time since November 2022.

On the flip side, any meaningful pullback seems to find decent support and attract fresh buyers near the 7.1200-7.1150 horizontal zone. This should help limit the downside for the USD/CNH pair near the trend-channel support, currently around the 7.1030 area, which is closely followed by the 7.1000 round-figure mark. A convincing break below the latter will negate the constructive setup and shift the near-term bias in favour of bearish traders.