USD/CNH fell for a fourth straight day in Tuesday’s Asian session, reaching its lowest level since May 2023. It traded near 6.9060, down over 0.10% on the day.
The move continued a medium-term decline that began after the April 2025 swing high. Price action also moved below the lower edge of a short-term descending channel.
Technical Momentum Signals
MACD readings showed the MACD line below the Signal line near the zero mark. The negative histogram widened modestly, pointing to increasing downside momentum.
The daily RSI was 27, which signals oversold conditions and may limit further losses in the near term. A shift in momentum would include MACD moving back towards zero and RSI rising above 30.
If a corrective rebound develops, the descending setup may still restrict gains. The first resistance level mentioned is 6.9495 near the upper channel boundary.
The technical analysis was produced with assistance from an AI tool.
Fundamental Reversal Drivers
Looking back, we saw the bearish sentiment from late 2025 play out as predicted, with USD/CNH breaking its descending channel. That well-established downtrend pushed the pair to multi-year lows toward the end of last year. The technical indicators at the time were signaling strong downward momentum.
The landscape has shifted significantly since then, as the pair has now rebounded to trade near 6.9800. This reversal is largely driven by policy divergence, with the People’s Bank of China cutting its one-year Loan Prime Rate last month to support an economy that saw Q4 2025 GDP miss expectations. In contrast, a robust US jobs report for January 2026 keeps the Federal Reserve hesitant to lower its rates.
For the coming weeks, derivative traders should consider positioning for further upside, as the fundamental picture now supports a stronger dollar. Buying call options with strike prices approaching the key psychological level of 7.0000 could be a viable strategy. We can also look at bull call spreads to manage premium costs, especially as implied volatility may rise with the shifting trend.
We should remain cautious, as the daily RSI is now approaching overbought territory above 65, which could invite some short-term profit-taking. A failure to break and hold above the recent highs around 6.9950 might signal that this rebound is losing steam. A drop back below the 6.9500 level would challenge the current bullish outlook.
