The People’s Bank of China (PBoC) continues to set the daily yuan fixing at progressively stronger levels, signaling a measured effort to guide the currency higher. USD/CNH was last seen trading near 7.1636, according to FX strategists Frances Cheung and Christopher Wong at OCBC.
Policy signal: stronger fix, controlled pace
Over the past 96 trading days since mid-April, the official USD/CNY fixing rate has declined by roughly 1,056 pips, averaging an 11-pip adjustment per session. Historically, widening spot-fix deviations reflected depreciation pressures on the renminbi, with stable fixings used to cap losses in 2023 and 2024. This time, however, the widening gap reflects a deliberate policy tilt, with the fix consistently lower than spot—underscoring official intent to gradually strengthen the RMB.
RMB outlook: supportive factors emerge
OCBC analysts note that gradual RMB appreciation, combined with gains in the domestic equity market, could help restore investor confidence and attract renewed foreign capital inflows. Recent weeks have already seen net foreign equity inflows into China. Alongside expectations of a Fed rate-cut cycle resumption, these dynamics provide a constructive backdrop for further RMB appreciation, particularly if Chinese growth stabilizes.
Technical picture: bearish momentum building
Daily momentum indicators are tilting mildly bearish, with the RSI nearing oversold territory. Key technical levels are as follows:
-
Support: 7.1460 (61.8% Fibonacci retracement of 2024 low–2025 high), followed by 7.1100 and 7.0800 (76.4% Fibonacci). A decisive break below these thresholds could accelerate downside and spill over into other Asian FX crosses.
-
Resistance: 7.1770 (50-day moving average), 7.1830 (21-day moving average), and 7.2000–7.2030 (100-day moving average, 50% Fibonacci).
Market implications
A continuation of the PBoC’s guided appreciation strategy could weigh on USD/CNH in the near term, with potential spillovers into other Asian currency pairs (USDAxJs). The pair’s trajectory will likely hinge on both the sustainability of Chinese economic stabilization and the Fed’s policy path in the months ahead.
