The USD/CNH pair edged closer to the 7.3500 level on Wednesday, driven by renewed strength in the U.S. dollar amid heightened expectations of a hawkish Federal Reserve. Markets have recalibrated their outlook on U.S. monetary policy after recent remarks from Fed officials signaled a commitment to keeping interest rates elevated to combat inflation.
China’s yuan, meanwhile, struggled against the greenback as domestic economic concerns persisted. Lingering worries over China’s slowing recovery and subdued sentiment in global markets have compounded the currency’s weakness, giving the dollar an added boost. The Fed’s hawkish outlook has further widened the divergence between U.S. and Chinese monetary policies, placing pressure on USD/CNH.
This upward momentum in the pair also reflects broader dollar strength, with the greenback supported by robust U.S. economic data. The possibility of prolonged higher rates has fueled demand for the dollar, positioning USD/CNH near critical resistance levels.
As the pair hovers near the 7.3500 mark, traders are closely watching for fresh economic data and global developments. A continuation of the Fed’s hawkish rhetoric or signs of further yuan weakness could drive USD/CNH even higher in the coming sessions.
