Core Viewpoint - The article highlights significant fluctuations in the foreign exchange market, particularly the decline of the US dollar and the rise of the Chinese yuan, alongside Moody's decision to maintain China's sovereign credit rating, which has drawn market attention [1][9]. Currency Market Dynamics - On May 26, the US dollar index fell to 98.6921, marking a three-week low, while both onshore and offshore yuan appreciated, with the offshore yuan (CNH) breaking the 7.17 mark, reaching a high of 7.16155, the highest since December 2024 [1][3]. - The offshore yuan has seen a decline of over 2500 basis points in just over a month, influenced by concerns over the US's dual deficits following Moody's downgrade of the US credit rating from Aaa to Aa1 [6]. Monetary Policy Insights - The Federal Reserve's latest meeting minutes indicated a "hawkish wait-and-see" stance, pushing back rate cut expectations to September, while disappointing durable goods orders data led to short-term profit-taking on the dollar [8]. - Goldman Sachs' forex strategy team suggests that if the dollar index continues to decline, the yuan may test the 7.15 resistance level, but the second half of the year will depend on the divergence in monetary policies between China and the US [8]. Government and Economic Response - Moody's maintained China's sovereign credit rating at "A1" but kept the outlook negative, citing structural challenges in economic growth, including real estate adjustments and local debt risks. However, short-term fiscal stimulus and central bank support provide a buffer [9]. - The Chinese Ministry of Finance responded positively to Moody's decision, highlighting the government's macroeconomic policies since last year's fourth quarter, which have led to improved economic indicators and enhanced market confidence [9].