USD/CNH Price Analysis: Violates key support, Yuan hits 5.5-week high

• USD/CNH's daily chart is aligned in favor of the bears. 
• The offshore Yuan could continue to gain ground against the greenback.

USD/CNH breached support at 6.9569 (Feb. 6 low) on Tuesday and is currently trading at 6.9317, the lowest level since Jan. 24. 

To put it another way, the offshore Yuan (CNH) has hit a 5.5-week high against the greenback.

The dollar fell sharply on Tuesday as Federal Reserve (Fed) cut rates by 50 basis points in order to contain the negative impact of coronavirus on the economy and markets. That post-Fed rate cut sell-off is being extended in Asia. 

Bears in control

The pair has convincingly breached the support at 6.9569, confirming an end of the bounce from the Jan. 20 low of 6.8453 and putting the bears back in the driver's seat. 

Alongside that, the 14-day relative strength index is reporting bearish conditions with a below-50 print. 

As a result, a deeper drop to 6.90 could be in the offing. The bearish case would weaken above the 200-day average, currently lined up at 7.00. 

Daily chart

Trend: Bearish

Technical levels