According to OCBC analysts Sim Moh Siong and Christopher Wong, the Chinese Yuan (RMB and CNH) remains supported by softer US Dollar dynamics and ongoing exporter conversion, contributing to a gradual appreciation bias against the US Dollar. The People’s Bank of China (PBoC) is signaling a preference for measured gains in the Yuan, as evidenced by its daily fixing. On Friday, the USDCNY midpoint was set at 6.7817, which is approximately 550 pips above market expectations, indicating that the PBoC is comfortable with gradual RMB strength but is actively leaning against an overly rapid or one-way appreciation move [1].
The USD/CNH pair last closed at 6.7210, with daily momentum described as mildly bearish and the Relative Strength Index (RSI) falling into oversold territory. While the bias remains skewed to the downside, analysts caution that the risk of a snapback is not ruled out, especially around key support and resistance levels. Resistance is noted at 6.7480 (21-day moving average) and 6.7540, while support is identified at 6.72, 6.7140 (61.8% Fibonacci retracement of the 2022 low to triple-top), and 6.70 [1].
The fixing behavior by the PBoC reinforces the view that any further appreciation of the Yuan is likely to be gradual, with the central bank aiming to avoid excessive volatility or a one-way move. The current market environment, characterized by a softer US Dollar and supportive exporter flows, is expected to continue underpinning the RMB, but the authorities are clearly signaling caution regarding the pace of gains [1].
CONCLUSION
The Chinese Yuan is showing a gradual appreciation bias against the US Dollar, supported by market dynamics and exporter flows. However, the PBoC's fixing strategy indicates a preference for measured gains, suggesting that any further appreciation will likely be slow and controlled. Market participants should remain alert to potential snapbacks around key technical levels.