The Chinese yuan is poised for modest gains against the US dollar after a high-profile summit between President Donald Trump and President Xi Jinping in Beijing, according to fresh assessments from Bank of America (BofA) and Societe Generale. The two major banks see diplomatic progress reducing immediate trade war risks, offering a tailwind for the currency despite China’s persistent domestic headwinds.
BofA’s post-summit outlook projects a 1-2% appreciation of the yuan over the next quarter, potentially pushing USD/CNY from current levels near 7.25 toward the 7.10-7.20 band. The bank’s foreign exchange strategy team highlights three pillars: the summit’s conciliatory tone lowering the risk of renewed tariffs, the People’s Bank of China’s preference for currency stability via its daily fixing mechanism, and moderating US interest rate expectations that narrow the yield differential supporting the dollar. However, BofA warns that a breakdown in follow-up negotiations, new US tariffs, or a sharper Chinese economic slowdown could reverse the trend.
Societe Generale’s pre-summit note observed that the yuan had already strengthened in the lead-up to the meeting, breaking through key technical levels as traders reduced bearish bets. The bank attributed the move to positioning adjustments rather than fundamental economic improvement, calling the rally a “short-term tailwind” contingent on concrete outcomes. Its strategists noted that the sustainability of gains hinges on whether the talks produce tangible tariff relief or trade agreements.
Both banks underscore a cautiously optimistic but conditional path for the yuan. With no formal trade deal announced at the summit, the market’s reaction—and the yuan’s trajectory—now depends on follow-up actions. Forex traders are eyeing potential tactical opportunities to position for further yuan strength, while businesses with cross-border exposure face a slightly more favorable climate for Chinese importers and modest headwinds for US exporters.
