As shown by today’s USD/CNH chart:
→ the pair is trading around 7.35 yuan per US dollar;
→ historically, this level has acted as resistance, pushing the exchange rate lower in autumn 2022 and autumn 2023, as bulls briefly broke above but failed to sustain gains.
The current approach to this resistance level is partly driven by expectations of US President-elect Donald Trump’s policies, which in 2025 may include imposing trade tariffs and adopting measures likely to strengthen the USD further.
According to Reuters:
→ China holds approximately $3 trillion in foreign exchange reserves, giving it ample power to defend the yuan;
→ Wang Tao, Chief Economist at UBS for China, expects the USD/CNH rate to remain controlled near 7.4 yuan per dollar during the first half of 2025. However, if high tariffs are introduced by Trump’s administration, the yuan could weaken to 7.6 per dollar by the end of 2025.
Technical analysis of the USD/CNH chart reveals:
→ price fluctuations are forming a large contracting triangle, with higher lows in 2023 and 2024 indicating stronger demand;
→ an upward trend structure, highlighted in blue, emerged in late 2024;
→ a grey arrow points to the trend direction calculated using linear regression.
Thus, in early 2025, another attempt at a bullish breakout above 7.35 may occur, though resistance from bears could cause short-term pullbacks towards the lower blue trend line. Given Wang’s bullish outlook and supporting technical signals, it is reasonable to expect bulls to gain control of the 7.35 level during 2025.
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