USD/CNH is hovering near recent lows as reports of potential US tariffs on Chinese goods and the PBoC’s stance against swift Renminbi appreciation temper the recent downside. The broader bias for RMB gains remains in place, but near-term price action points to waning bearish momentum, with technical indicators starting to stabilise.
Tariff uncertainty has resurfaced after reports the US is considering a 7.5% levy on Chinese goods ahead of next month’s Trump–Xi meeting, though the currency response has so far been muted. Policy signals are also in focus: the PBoC’s Monday fixing was set around 600 pips above market expectations, and a firmer USD overnight adds to evidence that further RMB gains may be capped. On the charts, the daily trend remains mildly bearish, yet the RSI is turning higher from oversold levels, leaving room for a modest rebound. Resistance is seen at 6.74 and 6.7460, the latter aligning with the 21 DMA, while support sits at 6.72 and 6.70.
Technical And Policy Signals Limit Downside In USD/CNH
We see the USD/CNH pair trading near its recent lows of 6.72, but the downside is becoming increasingly limited. While the broader trend still favors a stronger Renminbi, the daily Relative Strength Index (RSI) is showing signs of turning higher from oversold territory. Derivative traders should prepare for a potential short-term rebound and avoid chasing short positions at these levels.
The People’s Bank of China (PBoC) is actively resisting rapid Renminbi gains, as evidenced by a recent fixing that was roughly 600 pips stronger than market expectations. Combined with reports of a potential 7.5% US tariff on Chinese goods ahead of the upcoming bilateral meetings, we expect policy headwinds to cap further RMB appreciation. Historically, similar tariff uncertainties and PBoC pushbacks have triggered swift 1.5% to 2% upward corrections in the USD/CNH pair within a matter of weeks.
Derivative Strategy And Risk Management Amid Volatile Backdrop
To capitalize on this setup, we recommend that derivative traders look at buying short-dated USD/CNH call options or implementing bull call spreads targeting the 6.7400 to 6.7460 resistance zone. Spot support remains firm around 6.7200 and 6.7000, which can serve as logical areas for setting tight stop-losses on any remaining short positions. Managing risk closely is crucial over the coming weeks as market volatility is bound to rise ahead of these high-stakes political negotiations.
