USD/CNH Under Pressure as RMB Pursues Gradual Appreciation Strategy

rekt_but_not_broke · 2026-01-09T10:24:05+00:00

The USD/CNH currency pair is depressed at around 7.0427 due to weak dollar sentiment and low fixing rates. Analysts note a policy-driven gradual appreciation of the RMB. Technical indicators suggest limited upside, with risks of decline if key support breaks.

rekt_but_not_broke

2026-01-09 10:24:05

Abstract generation in progress

The USD/CNH currency pair is trading at depressed levels, specifically around 7.0427, as a combination of weakening US dollar sentiment and deliberately low fixing rates continue to suppress the exchange rate. Technical indicators suggest limited upside momentum, with the Relative Strength Index approaching oversold territory, signaling potential for further decline if key support levels fail to hold.

Policy Intervention Shaping Currency Trajectory

According to OCBC’s FX specialists Frances Cheung and Christopher Wong, policymakers appear to be steering the Chinese currency toward gradual appreciation through a consistent fixing pattern that began in April 2025. The USD/CNY fix reached its lowest point in 14 months at 7.0638 last Friday, reflecting what analysts interpret as a coordinated effort to maintain orderly market conditions while allowing the RMB to strengthen progressively.

An intriguing observation in recent trading reveals a notable divergence: both spot market prices and Bloomberg consensus estimates for daily fixes have consistently come in below the official fixing rate over the past two weeks. This pattern raises questions about whether authorities will maintain their aggressive fixing strategy or potentially moderate the pace of setting lower rates to prevent excessive volatility.

Technical Outlook: Breaking Key Levels Could Trigger Sharp Moves

On the technical side, daily momentum remains slightly bearish with the RSI approaching oversold conditions. The critical support level sits at 7.0380—a breach below this threshold threatens to push the pair toward the 7.00 mark. Resistance remains anchored at 7.08 (21-day moving average).

Additional pressure could materialize from two directions: continued low USD/CNY fixing rates or broader weakness in the broader US dollar index. Conversely, any moderation in the pace of fixing adjustments might provide temporary relief and allow the pair to consolidate around current levels before the next directional move emerges.

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