- Trump doubles China tariffs to 20%, on top of existing levies
- PBoC fixes yuan stronger, pushing back against market pressure
- USD/CNH tests 7.3000, with momentum signals favoring upside
Summary
An additional 10% tariff on Chinese imports entering the United States has put the Chinese yuan on the back foot against the US dollar, accelerating the USD/CNH bullish breakout that began earlier this week. However, after briefly pushing above the key 7.3 level in early Asian trade, the yuan has since pared losses, suggesting Chinese authorities may be stepping in to prevent a deeper slide.
10 Plus 10
U.S. President Donald Trump announced the new tariffs starting March 4, doubling the existing duty imposed earlier in the month. He linked the move to China’s role in the fentanyl trade, arguing that cartels use Chinese components to manufacture the drug smuggled into the U.S.—a claim China disputes.
The unexpected escalation in trade tensions raises the risk of a stronger retaliatory response from Beijing, beyond the measures announced earlier this month.
USD/CNH Bullish Break Stalls at 7.3000
Source: TradingView
As seen throughout Trump’s presidential campaign and return to office, the yuan weakened on the news, pushing USD/CNH toward key resistance at 7.3000. For now, that level is holding firm, aided by the PBoC fixing Friday’s onshore yuan midpoint at 7.1738, well below the 7.2873 level implied by market forces.
With the 50-day moving average near 7.3000, this level carries technical significance, offering a setup for fresh trades depending on price action. RSI (14) and MACD continue to signal bullish momentum, favoring further upside.
A break above 7.3000 and 50DMA could open the door for longs targeting a retest of the February 12 high around 7.3250, with 7.3750 after that. A stop below 7.3000 would provide protection. Conversely, if 7.3000 continues to cap gains, the setup could be flipped. USD/CNH did some work around 7.2700 earlier this month, making it an area of interest, with more substantial support seen near 7.2345.