The market bias for the USD to CNY exchange rate is bearish.
Key drivers include the anticipated interest rate cuts by the Federal Reserve, which could further weaken the USD. Concurrently, the Chinese yuan is expected to appreciate as investment firms foresee it strengthening beyond the 7-yuan-per-dollar mark due to narrowing yield differentials and easing trade tensions. Economic growth factors in both countries also play a role; while China's economy shows signs of improvement, the US faces downward pressure as rate cuts loom.
Over the next 1–3 months, trading is expected to remain range-bound with the USD largely fluctuating around recent lows.
An upside risk could come from an unexpected positive shift in US economic data, potentially leading to a stronger dollar. Conversely, a downside risk is the implementation of the anticipated Chinese monetary easing, which may accelerate yuan appreciation and increase USD weakness.
