Analysts at the financial giant Goldman Sachs reportedly think the onshore Chinese yuan (CNY) will rise against the dollar over the next 12 months.

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SHANGHAI: China’s yuan jumped to a six-month high against the dollar on Tuesday, breaching a key threshold, after Beijing and Washington agreed to pause their trade war while the central bank also lent support through its official guidance rate.

China's yuan finished the domestic trading session at a six-month high against the dollar on Tuesday, underpinned by an unwinding of carry trades and a broader rush out of U.S. assets and back into Asia.

The People’s Bank of China on Tuesday elevated its reference rate for the Chinese yuan to surpass the key threshold of 7.2 per dollar for the first time since early April.

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Goldman Sachs predicts a weaker U.S. dollar against Asian currencies, driven by policy shifts and yuan strength.

Banks and brokers are seeing rising demand for currency derivatives that bypass the dollar, as trade tensions add a sense of urgency to a years-long shift away from the greenback.

The U.S. dollar remained slightly stronger against major currencies including the yen and the euro on Wednesday after the Federal Reserve left interest rates unchanged, in line with market expectations.