UOB Flags 6.7820 as Key Yuan Support Level

UOB's focus on 6.7820 comes at a time when the dollar is vulnerable. Recent US data has pointed to a cooling economy, and the market is pricing in less tightening from the Fed. This divergence – a dovish Fed versus a PBOC that has cut rates to support growth – creates a tension in USD/CNY. The yuan has strengthened in recent weeks, and 6.7820 marks the level where carry trade flows and exporter hedging may converge.

Next Decision Point: PBOC Fixing and US CPI

The immediate catalyst for a test of 6.7820 is the PBOC's daily fixing. Traders should compare the fix to the previous day's close and to market expectations. A fix that is significantly stronger than the prior close accelerates yuan gains. A mild fix suggests the PBOC wants to slow the move.

The second catalyst is US CPI, which will set the next leg of dollar direction. A lower print pulls the dollar down and pushes the yuan toward 6.7820. A hot CPI would reverse that, lifting USD/CNY away from support.

UOB has identified the level. Whether it holds or breaks depends on the interplay between PBOC policy and dollar momentum. Set alerts at 6.7820 and watch the fixing at 9:15 am Beijing time. A close below that level would open the path toward 6.7500. A failure to break would keep the range intact.

For a broader view of currency dynamics, use the forex correlation matrix to see how USD/CNY tracks the dollar index and Asia FX. The currency strength meter gives real-time readings on which currencies are driving the move.