Insights 
VT 
Key Points
- Onshore yuan fixed at 7.1815, its firmest since April; offshore yuan trades around 7.1873.
- US-China trade talks produce a “framework agreement” but lack concrete policy steps.
China’s yuan traded in a narrow range on Wednesday as markets reacted to headlines of progress in US-China trade talks without the boost of firm policy announcements. The onshore yuan held close to 7.1872 against the dollar by 0253 GMT, while the offshore yuan hovered at 7.1873, up just 0.04%. Despite the apparent thaw, traders remained cautious, aware that the optimism surrounding Tuesday’s talks had largely been priced in.
Officials from both countries said they had agreed on a framework to reset the Geneva agreement, aiming to de-escalate trade tensions and lift China’s curbs on rare earth exports. However, the lack of details kept risk appetite restrained, particularly among currency investors still reeling from months of cross-border uncertainty.
The People’s Bank of China offered a slightly firmer daily midpoint fix at 7.1815, its strongest since 2 April. Given the yuan’s trading band of 2% on either side of the fix, Wednesday’s midpoint allows a trading floor of 7.3251. The central bank’s consistent guidance around the 7.2 threshold appears calculated, with analysts from Citi noting that it signals Beijing’s intent to ensure stability amid external headwinds.
While sentiment has improved marginally, Singapore’s DBS warned that much of the optimism around the US-China “framework” may already be reflected in current exchange rates. As long as no firm commitments on tariffs or rare earth timelines are announced, they argued, the yuan is unlikely to make a decisive directional move.
Technical Analysis
The USDCNH pair is currently consolidating near the 7.18675 level after a sharp intraday swing. A low of 7.17764 marked the start of a rebound that tested 7.19421 resistance, though price was swiftly rejected from that high. Since then, the pair has remained range-bound between 7.18182 and 7.18943, suggesting market indecision ahead of potential macro catalysts.
Picture: USDCNH stalls near resistance; traders brace for breakout or range continuation ahead, as seen on the VT Markets app
The MACD shows a fading bullish momentum—its histogram shrinking and the MACD line flattening just above the signal line. Meanwhile, the 5 and 10-period moving averages are compressing against the 30-period MA, reinforcing a short-term equilibrium state.
Price is slightly below the short-term resistance zone (7.188–7.190). A confirmed breakout above 7.19421 would open room toward 7.20, but failure to hold the current level could result in a retest of the 7.177 support zone.
If upcoming sessions bring no additional clarity on rare earth policy or tariff rollbacks, traders may reduce risk further. Until then, yuan price action is likely to remain closely tethered to central bank signals and geopolitical headlines.
