The USD/CNH pair continues its decline, recording a level of 6.8628 today, its lowest since April 17, 2023. The pair is down approximately 2% year-to-date and has fallen by around 4% from its peak of 7.1534 recorded on October 8, 2025, to today’s low. Expectations point to continued strength of the Chinese yuan against the US dollar, driven by several key factors, most notably:
- China’s ongoing reduction of its holdings of US Treasury bonds, having cut these holdings by half since 2013.
• The cancellation of tariffs imposed by former US President Donald Trump on most countries following a ruling by the US Supreme Court, with China considered one of the main beneficiaries of this decision.
• Market expectations that the US Federal Reserve will cut interest rates twice during the current year.
• The current policy of the People’s Bank of China aimed at strengthening the yuan to support the domestic economy and maintain financial stability, amid a record trade surplus of $1.2 trillion recorded last year.
• The continued rise in US public debt, which has reached approximately $38.5 trillion, a new record level, raising concerns within the United States—particularly with core personal consumption expenditures inflation standing at 3%, and US GDP growth for the fourth quarter slowing to 1.4%, which could signal a potential phase of stagflation.
In this context, the People’s Bank of China yesterday kept its one-year and five-year lending rates unchanged, as expected, at 3.00% and 3.50% respectively, for the ninth consecutive month.
From a technical perspective, indicators suggest a likelihood of further downside in the USD/CNH pair in the coming period for several reasons. First, a bearish crossover remains in place between the 20-day and 50-day moving averages, indicating continued negative momentum. Second, the Relative Strength Index is currently around 25 points, within oversold territory, reflecting persistent downward pressure on the pair. Third, the MACD indicator shows a bearish crossover between the MACD line and the signal line, supporting expectations of continued negative momentum in the period ahead.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
