The USD/CNH pair has pulled back slightly from recent highs, with Chinese policymakers maintaining a firm control over the daily fix. The People’s Bank of China (PBoC) set the reference rate at 7.1879 on December 5, slightly lower than the previous day’s 7.1934, after the pair had reached 7.2736 in recent trading.
The ongoing strength of the PBoC’s influence over the yuan is evident, as the central bank aims to prevent excessive depreciation of the renminbi (RMB). Despite the USD largely trading within a range, the PBoC’s fixing pattern suggests a concerted effort to not only curb the RMB’s weakening but also to guide its directional movement in the currency markets.
Analysts note that while tariff-related pressures on the RMB remain a potential concern, this issue may only materialize in 2025, following the potential inauguration of President Donald Trump. In the meantime, market participants are awaiting the Chinese Economic Work Conference (CEWC) scheduled for December 11-12 for further signals on monetary policy.
Technical indicators show that daily momentum is flat, with the Relative Strength Index (RSI) nearing overbought territory. While a corrective pullback cannot be ruled out, immediate support for the pair is seen at 7.2460 (the 21-day moving average), while resistance levels are positioned at 7.32 and 7.3450.
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