OCBC Bank’s currency strategists have highlighted a gradual appreciation bias for the Chinese yuan against the US dollar, while also cautioning that persistent trade-related risks are capping the currency’s upside. The analysis comes amid a softer dollar index and China’s continued economic recovery, with the People’s Bank of China (PBOC) appearing comfortable managing the yuan’s pace to preserve export competitiveness.
In its assessment, OCBC notes that the yuan’s strength is supported by China’s trade surplus dynamics, improving economic data and broader dollar weakness. However, the bank’s FX strategists also emphasize that unresolved tariff uncertainties and the risk of new US trade measures are preventing a more pronounced appreciation. These external pressures have kept USD/CNY trading near the 7.1 level, within a relatively narrow band over the past month.
For traders, OCBC says key technical levels in USD/CNY may mark potential breakout or reversal zones. A sustained break below support could accelerate yuan gains, while a bounce would suggest continued consolidation. For businesses and investors, the capped upside reinforces the importance of currency hedging strategies such as forwards and options, particularly for those exposed to China-related revenue or costs.
Overall, the outlook is for a stable but range-bound yuan until clearer signals emerge from Washington and Beijing on trade policy. Market participants should monitor upcoming economic data and central bank communications for possible shifts in the currency’s trajectory.
