What we really want to keep a look out for ... is how this is then interpreted by the U.S. because Trump can always come back with their currency intervention slant on this. Vishnu Varathan Mizuho Bank

The U.S. and China have been locked in a trade war that has lasted more than a year, with tariffs being placed on billions of dollars worth of each other's goods. The protracted dispute has dented market sentiment and raised concerns over the outlook for the global economy. On Monday, the Chinese central bank set the yuan's midpoint at 6.9225 against the dollar — its weakest level since December 2018, according to Reuters.

Piron said it was Monday's midpoint fixing of the yuan by the People's Bank of China that likely "drove" the Chinese currency lower. "The message is: The blessing was ultimately given by the fixing," he said. The move to place the fixing "significantly" above 6.9 shows China "likes to be in control of the situation," Piron said. For its part, the Chinese central bank said Monday it is confident of being able to keep the yuan basically stable. In a statement published on its website, the central bank largely attributed the losses in the yuan to trade protectionism and tariffs on Chinese goods.

Yuan look ahead