USD/CNH weakens as China signals policy flexibility amid recovery concerns

USD/CNH declined 0.2% to 7.2580 following China's National Bureau of Statistics announcement of mixed economic data and policy readiness. May industrial output grew 5.8% year-over-year, slightly above expectations, while retail sales received support from online promotions and trade programs. However, the NBS spokesperson emphasized that the economic recovery foundation needs strengthening amid international uncertainties. Chinese authorities highlighted their well-stocked policy toolkit and flexibility to adjust macro policies as needed, suggesting potential stimulus measures ahead. The acknowledgment of Geneva trade discussions benefiting China-US relations provided additional support for the yuan. Technical indicators show USD/CNH testing support at 7.2500, with resistance at 7.2750. Further yuan strength could materialize if China implements additional stimulus measures, while persistent recovery concerns may limit downside for the dollar-yuan pair.