{"id":22439,"date":"2025-05-16T05:05:52","date_gmt":"2025-05-16T05:05:52","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=22439"},"modified":"2025-05-16T05:05:52","modified_gmt":"2025-05-16T05:05:52","slug":"yuan-firms-as-tariff-truce-lifts-sentiment","status":"publish","type":"post","link":"https:\/\/www.global-vtrader.com\/en\/analysis\/yuan-firms-as-tariff-truce-lifts-sentiment\/","title":{"rendered":"Yuan Firms as Tariff Truce Lifts Sentiment"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.global-vtrader.com\/en\/wp-content\/uploads\/sites\/4\/2025\/05\/Image_fx-2025-05-16T130402.470-1024x559.png\" alt=\"\" class=\"wp-image-22441\" \/><\/figure>\n\n\n\n<p><strong>Key Points:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>USD\/CNH falls to 7.1989 amid broad dollar weakness and improved Sino-U.S. trade sentiment.<\/li>\n\n\n\n<li>PBOC sets midpoint at 7.1938, much closer to market expectations than recent months.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p>The Chinese yuan advanced modestly against the U.S. dollar on Friday, buoyed by global dollar softness and improved market sentiment following the 90-day U.S.-China tariff truce. USD\/CNH slipped below 7.20 to trade near 7.1989, while onshore spot yuan also gained, last quoted at 7.2020.<\/p>\n\n\n\n<p>The shift in tone came as major U.S. economic data surprised to the downside earlier in the week, pushing Treasury yields lower and reviving bets for more Federal Reserve rate cuts this year. That pressure on the dollar gave room for EM currencies\u2014including the yuan\u2014to firm.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Federal Reserve Chair Jerome Powell said policymakers are weighing changes to key parts of the framework that guides their monetary policy decisions <a href=\"https:\/\/t.co\/EgrneORI2o\">https:\/\/t.co\/EgrneORI2o<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1922998542114664523?ref_src=twsrc%5Etfw\">May 15, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Reinforcing yuan sentiment, investment banks such as Citi and UBS <a href=\"https:\/\/www.cnbc.com\/2025\/05\/13\/investment-banks-lift-china-growth-outlook-after-surprise-trade-deal-with-us.html\">raised their China GDP forecasts<\/a> for 2025, citing an expected improvement in trade flows and capital expenditure after the tariff de-escalation.<\/p>\n\n\n\n<p>The People\u2019s Bank of China (PBOC) has also <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2025-05-14\/pboc-daily-yuan-support-below-estimates-for-first-time-this-year\">subtly adjusted its guidance<\/a>. On Friday, it fixed the yuan at 7.1938, marking the smallest gap from Reuters\u2019 model estimates in months. Analysts suggest this is a signal the central bank is aiming to contain one-way bets and maintain currency stability as sentiment shifts.<\/p>\n\n\n\n<p>Strategists at Barclays warn of the potential for large exporter conversions should the yuan break below the 7.15 mark, estimating flows could reach $100 billion\u2014potentially accelerating the path toward 7.00 if not carefully managed.<\/p>\n\n\n\n<p>Still, caution remains warranted. Analysts at Nanhua Futures noted that while short-term sentiment may remain yuan-positive, the currency is likely to resume two-way volatility once optimism fades.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Analysis<\/h2>\n\n\n\n<p>The USDCNH pair edged lower through the latter part of the session, slipping from a session high of <strong>7.2155<\/strong> to close at <strong>7.1989<\/strong>. Price action remains broadly range-bound, but the intraday structure shows a bearish tilt as the pair failed to sustain above the <strong>7.2050<\/strong> resistance area and slipped below both the <strong>5- and 10-period moving averages<\/strong> on the 15-minute chart.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.global-vtrader.com\/en\/wp-content\/uploads\/sites\/4\/2025\/05\/image-16-1024x438.jpg\" alt=\"\" class=\"wp-image-22440\" \/><\/figure>\n\n\n\n<p class=\"has-text-align-center\"><em>Picture: USDCNH slips from 7.2155 peak as bearish pressure returns, with support holding near 7.1950, as seen on the <\/em><em><a href=\"https:\/\/vtmarketsapp.onelink.me\/CD7D\/240525WA\">VT Markets app<\/a><\/em><\/p>\n\n\n\n<p>MACD momentum has turned mildly negative, with the signal line crossover supporting the recent decline. Price tested the <strong>7.1950<\/strong> support area before stabilising marginally. If the pair fails to recover above <strong>7.2000\u20137.2020<\/strong>, further downside toward <strong>7.1900<\/strong> cannot be ruled out. However, a breakout above <strong>7.2060<\/strong> could reintroduce bullish pressure in the short term.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Cautious Forecast<\/h2>\n\n\n\n<p>The yuan may continue grinding higher against the dollar in the short term, especially if risk appetite holds and the dollar remains soft. However, without <a href=\"https:\/\/t.co\/4Jc20seqcy\">clearer policy direction from the Fed<\/a> and more concrete trade breakthroughs, the rally is likely to be capped near the 7.15 mark. Traders should watch the PBOC\u2019s daily fixings closely for signs of tolerance\u2014or resistance\u2014toward further appreciation.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/\">Create your live VT Markets account<\/a><\/strong><strong> and <\/strong><strong><a href=\"https:\/\/myaccount.vtmarkets.com\/login?_gl=1*1azgbap*_gcl_au*NjE5NTE3MjY4LjE3NDQ2MDA3NDI.*_ga*MTY4OTgwNTU5Mi4xNzM2NzQ2MTgy*_ga_J26NL1ZVX7*czE3NDQ5NDQ0NTYkbzEyMCRnMCR0MTc0NDk0NDQ1NiRqNjAkbDAkaDA.\">start trading<\/a><\/strong><strong> now.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Weaker dollar, upbeat growth outlook, and cautious daily fixings support short-term yuan strength. &#8211; vtmarkets.com<\/p>\n","protected":false},"author":2,"featured_media":22441,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[27],"tags":[12,45],"class_list":["post-22439","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-forex","tag-yuan"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/22439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/comments?post=22439"}],"version-history":[{"count":0,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/posts\/22439\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media\/22441"}],"wp:attachment":[{"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/media?parent=22439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/categories?post=22439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-vtrader.com\/en\/wp-json\/wp\/v2\/tags?post=22439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}