OCBC strategists Sim Moh Siong and Christopher Wong report that USD/CNH has traded higher, driven by persistent USD demand amid Iran-related geopolitical tensions, which have supported the Dollar [1]. Beijing has responded by setting a stronger CNY fix, aiming to stabilize the Renminbi and partially offset broader softness in Asian currencies [1]. The fixing pattern this week shows a slight increase in the strength of the RMB fix, with the 30-day rolling average change in the USD/CNY fix rising to -33 pips, compared to -27 pips a month ago [1].
The strategists note that maintaining a strong fix can bring relative stability to the RMB, especially if the gap between the expected fix and the actual fix does not start to deviate [1]. However, they caution that if USD strength persists and risk sentiment deteriorates further, Beijing may need to implement even stronger CNY fixes to counter near-term depreciation pressures [1].
At the time of reporting, USD/CNH was last at 6.9260, with daily momentum described as bullish and the RSI rising, indicating upside risks remain [1]. Key resistance levels are identified at 6.9370 (50 DMA), 6.9520, and 6.9780 (38.2% fibo retracement of August high to February low), while support is noted at 6.8970 (21 DMA) and 6.88 [1].
No forward-looking analyst opinions beyond the need for stronger fixes if USD strength continues are provided, and there is no mention of specific market reactions or ticker symbols in the article [1].
CONCLUSION
USD/CNH is experiencing upside risks due to persistent USD strength and geopolitical tensions, with Beijing's stronger CNY fix providing some stability. If these pressures continue, even stronger fixes may be required to offset depreciation. The market sentiment is cautiously bullish, with resistance levels closely watched.