• USD/CNH steps back from multi-day high amid mixed markets, USD pullback.
• PBOC Deputy Governor Chen Yulu hints at more financial support, CCP’s Han Wenxiu signals new incremental policies.
• Shanghai mixed unlock opportunity on community covid cases, China, Japan, South Korea highlight risks from Ukraine-Russia crisis.
• USD remains pressured amid softer yields, mixed Fedspeak, US PPI eyed.

USD/CNH grinds higher around 6.7800 after refreshing the multi-month top during Thursday’s Asian session.

The offshore Chinese yuan (CNH) pair’s latest weakness could be linked to the covid resurgence in the world’s second-largest economy. Also fueling the USD/CNH prices is the monetary policy divergence between the Fed and the People’s Bank of China (PBOC).

Recently, PBOC Deputy Governor Chen Yulu said, “The PBOC will step up financial support for the real economy.” At the same presser, Han Wenxiu, a senior official of China's Communist Party China said that they are eyeing new incremental policies to prop up growth and will take steps when necessary.

On a different page, Shanghai barely missed the covid-led unlock as community cases snapped the two-day absence of coronavirus infections, which could have helped the authorities to remove activity restrictions at the end of the third day, but didn’t.

Elsewhere, the financial leaders from Japan, China and South Korea delivered a joint statement this Thursday, per Reuters, which showed that the policymakers warrant caution over fallouts from the Russia-Ukraine crisis.

It’s worth noting that an absence of hawkish comments from the Fed seems to stop USD bulls from cheering upbeat inflation data. That said, the US Consumer Price Index (CPI) rose to 8.3% YoY versus 8.1% expected and 8.5% prior. More importantly, the CPI ex Food & Energy, better known as Core CPI, crossed 6.0% forecasts with 6.2% annual figures, versus 6.5% previous readouts. Following the data, during early Thursday in Asia, the previously hawkish Federal Reserve Bank of St. Louis James Bullard mentioned that he ''won't emphasize single inflation report too much but inflation is more persistent than many have thought.''

Looking forward, weekly prints of the US Jobless Claims and monthly Producer Price Index (PPI) will also decorate today’s calendar. Should the factory gate inflation also appear strong, the USD may regain the upside momentum as the Fed’s 75 bps rate hike concerns aren’t off the table.

Technical analysis

Overbought RSI conditions test USD/CNH buyers targeting January 2020 low near 6.8455.