Chinese Yuan edged higher against Dollar today, pushing to a fresh 32-month high and drawing renewed attention to Beijing’s currency stance. The move comes amid growing speculation that Chinese authorities may be quietly signaling greater tolerance for a firmer Yuan.
However, a broader look at currency markets suggests Yuan’s gains are far more a function of broad-based Dollar weakness than a deliberate shift in Chinese policy. The greenback has been under sustained pressure globally, and USD/CNH has largely followed that trend rather than leading it. Indeed, when compared with other major currencies, Yuan’s appreciation has been notably measured and controlled. This relative restraint argues against the idea that Beijing is prepared to allow a free or rapid strengthening.
Still, markets have taken note of subtle policy signals. Late last week, the People’s Bank of China set Yuan’s daily fixing at 6.9929 per Dollar, the first time the midpoint has been set stronger than the closely watched 7.00 level since May 2023. It also marked the largest one-day strengthening since August. China went a step further today. Before markets opened, the PBOC fixed the midpoint at 6.9843 per dollar, the strongest level since May 17, 2023. The move reinforced the perception that authorities are comfortable with some near-term Yuan strength, particularly against a weakening dollar.
That said, analysts remain wary of extrapolating too much. Expectations are building that authorities could push back if appreciation pressures intensify, using policy tools to smooth gains and preserve competitiveness. The prevailing view remains that any Yuan strength will be tightly managed rather than left to market forces.
Technically, cross-rates echo that narrative. In EUR/CNH, the strong rally over the past two days and a clear break above the 55 Day EMA at 8.2025 suggest the corrective pullback from 8.4638 has completed at 8.0654, 38.2% retracement of 7.4886 (2025 low) to 8.4638 (2025 high) at 8.0913. Near-term focus is now on 8.3004, with a firm break there opening the door for a retest of 8.4638 high.
Meanwhile, USD/CNH continues to drift lower, but downside momentum is clearly waning. Daily MACD shows fading bearish pressure, while the pair has struggled to extend beyond the falling channel floor and 100% projection of 7.4287 to 7.1608 from 7.2224 at 6.9545.. A rebound from current levels, followed by break above 6.9956, would confirm short-term bottoming and reinforce the view that Yuan strength remains controlled rather than open-ended.
