
USD/CNH Forecast: New Year, Same Yu-an Strength
USD/CNH has been trending consistently lower within a bearish channel since the start of November, falling 2500 pips from near 7.14 to closer to 6.88 now – what are the levels to watch next?
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USD/CNH has been trending consistently lower within a bearish channel since the start of November, falling 2500 pips from near 7.14 to closer to 6.88 now – what are the levels to watch next?
All eyes are on how China responds to Trump’s 104% tariff. With the numbers already becoming meaningless, the Australian dollar could get dragged a lot lower with a yuan devaluation, with AUD/CHF leading the bearish stampede amid Swiss franc strength.
It has been a volatile week for FX traders so far this week, and one which has benefitted AUD/USD and yuan bulls. While both could extend their moves if US-Sino relations remain as warm as they first appear, traders would also be wise to remember volatility cuts both ways. Especially when Trump is waving his executive-order pen around.
Weak GDP figures saw interest rates traders fully price in three 25bp RBA cuts by Feb 2026. And AUD/USD could have traded much lower on Wednesday, were it not for a stronger yuan coming to the Aussies rescue later in the day.
USD/CNH has mirrored DXY trends quite well of late, and the Trump-fueled rally faces its next major test with US CPI data set for release tomorrow.
Soft data and month-end flows jolted the USD at its cycle highs. If the USD pulls back even slightly, it could help lift AUD/USD from its lows and track the yuan higher.
Another day, another big level gives way for global markets. And that has seen the yuan weaken to 7.2 against the US dollar, a level not seen since 2008.
Despite attempts to stabilise the yuan, USD/CNH has reached 7.000 as policies between the Fed and PBOC continue to widen.
If current (and expected) yield differentials are anything to go by, the yuan looks quite overvalued. Especially in the context of ongoing growth concerns and geopolitical risks.
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