USD/CNY rises as China defends rare earth controls amid US tensions

USD/CNY advanced 0.15% to 7.2850 as China's Commerce Ministry defended its rare earth export control measures, citing national security and non-proliferation obligations. The ministry's statement specifically blamed the US for escalating tensions and emphasized that restrictions target military applications of medium and heavy rare earth metals. This development intensifies the ongoing trade dispute between the world's two largest economies, potentially disrupting global supply chains for critical materials used in technology and defense sectors. Market participants are pricing in increased geopolitical risk, supporting dollar strength against the yuan. Technical indicators show USD/CNY testing resistance at 7.3000, with immediate support at 7.2700. The escalating rhetoric suggests further yuan weakness is likely if diplomatic tensions persist, while any breakthrough in negotiations could trigger a sharp reversal. Traders should monitor upcoming trade data and official statements from both nations for directional cues.