Traders believe Chinese currency will continue to appreciate but at a slower pace this year.
The yuan closed slightly higher versus the dollar on Friday after the midpoint rebounded from its biggest 11-session fall on record, in line with a drop in the dollar index on Thursday in global markets.
The People's Bank of China (PBOC) has signalled that yuan trade will correlate to the dollar but has also shown more willingness to let its daily midpoint fixing fluctuate in a wider range, traders said.
The yuan's fixing is seen likely to fluctuate more when the US dollar index stages sharp volatility.
As such, traders believe the yuan will find a floor at around 6.35/dollar in the near term unless the dollar index breaches 81.784, its highest level this year.