USD/CNH Chart Analysis: Understanding Exchange Rate Movements Amid Trade Tensions

USD/CHN Daily Chart

In February 2025, escalating U.S.-China trade tensions have caused significant fluctuations in the USD/CNH exchange rate, which is currently trading within the 7.20–7.30 range. This volatility is largely driven by President Trump’s tariffs on China and China’s retaliatory measures. While the postponement of tariffs on Canada and Mexico has provided temporary relief to the market, its impact on the yuan remains limited. In the short term, the outcome of the U.S.-China summit and the Federal Reserve’s interest rate policies will be crucial in determining the exchange rate’s direction. The forex market is expected to remain volatile for the time being.

Future Outlook and Predictions

1. Current Market Situation
The USD/CNH is trading around 7.30. The chart shows significant fluctuations since July last year, with the pair dropping to near 7.00 in October before rebounding to its current range. These movements are attributed to U.S.-China trade tensions, Chinese government measures, and U.S. interest rate policies.

2. Short-term Outlook
In the short term, U.S. tariffs on China will likely drive volatility. Potential retaliatory tariffs from China could further destabilize the market. However, a positive outcome from U.S.-China negotiations could strengthen the yuan. Trading within the 7.20–7.30 range is expected in the near term.

3. Mid-term Predictions
Mid-term trends will likely hinge on U.S. interest rate policies. If the Federal Reserve maintains high rates, the dollar may strengthen further. On the other hand, increased Chinese economic stimulus could support the yuan. Key levels to watch are resistance at 7.40 and support at 7.10.

4. Long-term Outlook
In the long term, the direction of U.S.-China economic relations and trade policies will determine the pair’s trajectory. Historically, USD/CNH has tended to form stable long-term trends, with movements likely staying within the 7.00–7.50 range. A drop below 7.00 would signal significant yuan appreciation, creating opportunities for investors.

Beginner Investment Advice

For beginners interested in the USD/CNH, now is a cautious yet opportune time to start. The current range of 7.20–7.30 provides a relatively stable entry point, allowing for low-risk trades within this range.

Start with small amounts and consider using the dollar-cost averaging method to build a stable portfolio. For instance, buy near 7.20 and consider selling near 7.40. Keep an eye on key events such as U.S.-China negotiations and Federal Reserve policies, which can influence exchange rates.

While currency markets are sensitive to global events and policies, understanding basic trends can lead to stable investments. Use this article as a guide to take your first steps into the forex market with confidence.