USD/CNH Price Forecast: Bearish bias persists below 100-day EMA, PBOC leaves its LPR unchanged

热门文章

The USD/CNH pair trades with mild gains near 6.8905 during the early European trading hours on Tuesday. However, the potential upside for the pair seems limited near a 34-month low amid US tariff turmoil.

USD/CNH posts modest gains around 6.8905 in Tuesday’s early European session.
The cross keeps the bearish vibe as price holds well beneath the 100-day EMA.
The first downside target is located at 6.8680; the immediate resistance level is seen at 6.9155.

US President Donald Trump said on Saturday he would raise a tariff from 10% to 15% on US imports from all countries, the maximum level allowed under the law. This action came after the US Supreme Court struck down Trump’s sweeping global tariffs on Friday.

On Monday, the US President warned countries against backing away from recently negotiated trade deals with the US, saying that he would hit them with much higher levies under different trade laws. Fears of a renewed trade war could exert some selling pressure on the US Dollar (USD) in the near term.

The People’s Bank of China (PBOC) left its Loan Prime Rates (LPRs) unchanged on Tuesday. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively. This decision was widely expected.

Technical Analysis:

In the daily chart, USD/CNH holds below the 100-day EMA, preserving a broader bearish bias. The 20-day Bollinger midline slides and caps rebounds, keeping the near-term tone heavy. RSI (14) at 31.7 sits near oversold, underscoring subdued momentum.

Price hovers just above the lower Bollinger Band at 6.8680, signaling persistent bearish pressure and a stretched condition. The bands slope lower with moderate breadth, pointing to steady downside volatility rather than a breakout. A base above the band floor could invite mean reversion toward the midline at 6.9155, while any recovery faces resistance at the upper band at 6.9633.

(The technical analysis of this story was written with the help of an AI tool.)

PBOC FAQs

What does the People's Bank of China do?

The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.

Who owns the PBoC?

The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.

What are the main policy tools used by the PBoC?

Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.

Are private banks allowed in China?

Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.