USD/CNY Forecast: Goldman Analysts See 6.40 On 12 Months Horizon

Chinese Yuan Forecast: MUFG Sees Further Gains Against Euro as PBoC Resists Dollar Strength

The Chinese Yuan could extend its gains against the Euro as Beijing’s currency policy limits the impact of a stronger US Dollar, according to MUFG.

MUFG expects further near-term Yuan gains against the Euro as the People’s Bank of China resists broader US Dollar strength, with EUR/CNY already around 10% below its January high.

Derek Halpenny, MUFG’s head of research for global markets EMEA and international securities, writes: “Recent PBoC fixing in USD/CNY indicate a desire to keep CNY on a strengthening path despite the broader gains for the dollar. EUR/CNY is 10% lower from the January high and we see near-term scope for further declines.”

USD/CNY ended Friday at around 6.6924.

The cross-currency effect is significant: if the Yuan holds relatively steady against the Dollar while the Euro falls, each Euro buys fewer Yuan even without a sharp decline in USD/CNY.

The pattern extends beyond China, according to Halpenny: “The continued CNY strength is helping isolate Asian currencies from the broader dollar gain. While the DXY has advanced 3.3% from the September low, the dollar against a basket of Asia FX is just 0.7% higher.”

Those measures cover different currency baskets, but the contrast helps explain why a broadly rising Dollar has not translated into uniform weakness across Asia.

Earlier ERUK coverage examined how export receipts and Beijing’s tolerance of appreciation were supporting the Yuan.

Trade negotiations complicate the currency outlook

The Yuan’s recent strength has not settled Europe’s complaints about Chinese competitiveness.

Writing before Friday’s talks concluded, Halpenny said: “Trade Commissioner Maros Sefcovic is in talks with Chinese Commerce Minister Wang Wentao and coinciding with these talks is the release yesterday of a PBOC document defending the FX policy of China and arguing against the level of CNY as being the cause of China’s large trade surplus.”

In a press conference after the negotiations, EU trade commissioner Maroš Šefčovič outlined an understanding covering Chinese hybrid-car exports, access for European goods and export licensing for critical materials.

The package still required endorsement by EU leaders, leaving its implementation unresolved.

That progress reduces the immediate relevance of a breakdown scenario, although it does not resolve the wider dispute over China’s trade surplus or establish a new exchange-rate agreement.

Halpenny writes: “Is the CNY undervalued? The answer seems certainly yes although the scale of undervaluation is debated and while this undervaluation helps boost exports the FX factor is only a partial explanation.”

France’s fiscal problems also weigh on the Euro in MUFG’s analysis, leaving EUR/CNY exposed to developments beyond China’s exchange-rate policy.

Halpenny sees energy prices as a further risk, tempered by evidence of economic resilience: “Increased concerns over a terms of trade hit from rising refined energy prices has also played a role and any further notable jumps in natural gas and diesel prices would likely hurt the economies in Europe. Still, we continue to see evidence of economic resilience in Europe that could help stabilise the euro at these lower levels.”

Goldman expects Yuan gains against the American Dollar

Goldman Sachs’s separate forecast points to USD/CNY at 6.40 over the next 12 months, equivalent to roughly 4.6% Yuan appreciation from Friday’s close.

Goldman’s economic outlook also distinguishes export strength from conditions at home: “In China, we expect real GDP growth of 4.5% yoy in 2026, reflecting broad-based export strength but headwinds from weak domestic demand.”