USD/CNH fell sharply after a stronger Chinese Yuan (CNY) daily fix and improved risk appetite following a US-Iran ceasefire. The CNY fix was set at 6.8680 versus 6.8854 the previous day.
The 6.8680 fix was the lowest USD/CNY fixing since April 2023. The move extended a guided RMB appreciation trend that has been in place since April 2025.
Stronger Fix And Risk On Appetite
Safe-haven demand for the US dollar eased as markets moved into a risk-on tone, linked to a 2-week ceasefire deal. Analysts expect CNH appreciation to remain steady, but said the daily fix should be watched for any change in pace.
USD/CNH was last recorded around 6.8335. Technical support is seen around 6.8200/70, described as a double bottom.
If USD/CNH breaks below that area, the next support levels are cited at 6.81 and 6.79. Attention is also on a Trump-Xi meeting in Beijing scheduled for 14-15 May.
Looking back to this time in April 2025, we saw a brief period of bearish momentum for USD/CNH, driven by a stronger yuan fix and a temporary US-Iran ceasefire. That sentiment was short-lived, as underlying economic pressures soon took over following the Trump-Xi meeting in May 2025. The support levels around 6.82 mentioned then were decisively broken as the dollar regained strength throughout the latter half of that year.
Current USD CNH Drivers And Focus
Today, the economic picture is quite different, with policy divergence between the US and China driving the market. China’s Q1 2026 GDP growth was just released at 4.7%, slightly missing expectations and increasing pressure on the PBoC to ease monetary policy. In contrast, the latest US core PCE data from last week remains elevated at 3.5%, suggesting the Federal Reserve will hold interest rates steady for longer.
This divergence has pushed the USD/CNH pair to its current level around 7.29, a stark contrast to the 6.83 we saw a year ago. We are now watching key resistance at the 7.32 level, which has been tested twice in the last quarter. Any further signs of weakness from China’s upcoming industrial production data could provide the catalyst for a breakout.
Given this outlook, we believe traders should consider buying three-month USD/CNH call options with a strike price of 7.35. This strategy positions for a potential move higher, capitalizing on the widening interest rate differential between the two economies. The cost of these options remains relatively low despite the clear trend.
We are also seeing an increase in implied volatility, which has risen from 4.5% to 5.2% over the past month. This suggests the market is pricing in a greater chance of significant price swings. Traders could use this environment to structure trades that benefit from a breakout, as the PBoC may struggle to contain yuan weakness if economic data continues to disappoint.
