USD/CNY nears 29-month low reached last week

• Coronavirus vaccine optimism weighs over the US dollar, pushes USD/CNY lower. 
• The PBOC announces the strongest daily fix since June 2018. 

The USD/CNY pair eyes a re-test of the 29-month low reached last Monday as the risk-on weighs over the safe-haven US dollar and the People's Bank of China's strong yuan daily fix eggs on speculators to make bullish bets on the Chinese currency. 

The currency pair is currently trading in the red near 6.5674 – just short of the multi-month low of 6.5623 reached last week. 

The American dollar is being offered and equities are drawing bids on hopes that potential widespread distribution of coronavirus vaccines next year would stabilize the global economy. Citigroup analysts foresee as much as a 20% decline in the US dollar next year. The optimism is stemming from recent disclosures of positive results of coronavirus vaccines by drugmaker Pfizer and biotechnology company Moderna. 

Besides, the upbeat risk sentiment, the bearish pressures around USD/CNY may have strengthened due to the Chinese central bank's decision to raise its official yuan midpoint to the highest in nearly 29 months. Early Tuesday, the PBOC set the daily midpoint rate at 6.5762 per US dollar, the strongest guidance since June 27, 2018. The daily fix was raised by 286 pips or 0.43% from Monday's midpoint rate of   6.6048. 

Technical levels