Exports have held up longer than expected, but Trump’s tariff threats remain a big risk. In July, he warned of a 40% penalty on goods rerouted to avoid tariffs. This highlights the weakness of Chinese exporters’ workarounds.
Policymakers are cautious about new stimulus. The “cash-for-clunkers” program has used up some local funds, but central leaders have not added more. This shows they prefer trade adjustments over heavy spending.
Yuan Outlook: Trade Pressures Weigh on USD/CNH
China’s slowing exports and weak imports signal pressure on growth, and this weighs on the yuan. The USDCNH pair may face upward pressure as investors expect slower demand and limited stimulus from Beijing. However, the technical charts show uncertain behaviour due to the persistent weakness in the US dollar index. Dovish comments from the Fed drive the weakness in the US dollar index, as markets anticipate rate cuts in September.
Monthly Chart: Yuan Holds Triangle Support, Key Levels in Focus
The long-term outlook for USDCNH is observed using the monthly chart below. It is found that the pair is trading within a blue ascending triangle. The recent drop in the US dollar index pushed the pair down to the triangle’s support.
A break below the 7.10 level could trigger a deeper decline. The pair is also moving within a wedge pattern, marked by red dotted trend lines. The failure to hold strength in the 7.40–7.50 zone highlights resistance at the top. The pair remains in an uncertain zone between the 7.00 and 7.50 levels and awaits direction. A break above 7.50 is needed for bulls to regain control.