USD/CNH edged slightly higher to around 6.8905 in early European trade on Tuesday. The price stayed below the 100-day EMA, which keeps the overall bias bearish.
US tariff developments remained the main focus after Donald Trump said he would raise a tariff on US imports from all countries from 10% to 15%—the maximum allowed under the law. The comments came after the US Supreme Court on Friday struck down his broader global tariffs.
China Policy Backdrop
Trump also warned on Monday that countries should not walk back recently negotiated US trade deals. He added that higher levies could still be imposed under other trade laws.
In China, the PBoC left its Loan Prime Rates unchanged on Tuesday, as expected. The one-year LPR held at 3.00%, and the five-year LPR stayed at 3.50%.
Technically, USD/CNH remained below the 100-day EMA and the 20-day Bollinger midline. The RSI (14) was 31.7, near oversold levels.
Support sat near the lower Bollinger Band at 6.8680. Resistance was near 6.9155, with an additional resistance level near the upper band around 6.9633.
Implications For Traders
Looking back to 2025, our analysis flagged a bearish outlook for USD/CNH, with the pair near 6.8905. That view was based on renewed US tariff threats and technical signals showing price firmly below the 100-day moving average. The expectation then was a move toward lower support levels.
That bearish view has since become less clear because policies are moving in different directions. China’s economy has shown some resilience, with December 2025 exports beating expectations and rising 2.3% year-on-year, even as its central bank continues to ease. By contrast, the US Federal Reserve has stayed hawkish, keeping rates elevated.
This policy split was reinforced this week when the People’s Bank of China cut its five-year loan prime rate by a record 25 basis points to 3.95% to support the economy. This move widens the rate gap with the US, where the benchmark rate remains above 5.25%. Historically, a wider rate differential supports the US dollar versus the yuan.
With mixed signals—steady Chinese exports but aggressive easing—the clear one-way bearish trade idea from 2025 is no longer a sensible base case. The wide rate gap likely puts a floor under USD/CNH, making a deep downside break less likely in the near term. That also suggests any yuan strength may fade quickly.
For the weeks ahead, derivative traders may want to focus on strategies suited to range trading or a slow grind higher in USD/CNH. Selling out-of-the-money puts may help collect premium if the pair holds above support. A cautious bull call spread could also offer a lower-cost way to position for a gradual move back toward the 100-day moving average.
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