USD/CNY Outlook:
The USD/CNY is likely to decrease as it currently trades nearly 1% below its 90-day average and is close to recent lows. Escalating geopolitical conflicts are driving this downward movement.
Key drivers:
• Rate gap: The US Federal Reserve's stance on interest rates is more hawkish compared to the People's Bank of China, supporting USD strength.
• Risk/commodities: Oil prices have been volatile amid geopolitical tensions, negatively impacting risk appetite for the CNY.
• One macro factor: The recent US ISM services data is expected to remain solid, further boosting the USD.
Range:
The USD/CNY is likely to drift lower within its recent 3-month range, maintaining stability but testing lower extremes.
What could change it:
• Upside risk: A positive surprise in upcoming US economic data could shift trends towards the USD strengthening.
• Downside risk: Any de-escalation of geopolitical tensions could improve risk appetite for the CNY.
🇺🇸🇨🇳 USD/CNY Forecasts - End of 2026
🏦 Nomura
• Target: ~7.10–7.30
• Theme: Managed depreciation; PBoC smoothing volatility.