SHANGHAI, May 6 (Reuters) - China's yuan climbed to near three-year highs against the dollar on Wednesday, buoyed by prospects of a U.S.-Iran deal to end their weeks-long war and fresh signs of China's economic resilience.

But analysts caution about further volatility ahead, citing uncertainty around the Middle East conflict and the future path of U.S. monetary policy, while traders are also closely monitoring next week's China visit by U.S. President Donald Trump.

The onshore yuan CNY=CFXS changed hands at around 6.8200 at 0300 GMT, roughly 0.15% stronger than the close on April 30, when Chinese markets headed into a public holiday.

Prior to the market's open on Wednesday, China's central bank set the yuan's guidance rate CNY=PBOC at 6.8562 per dollar, the strongest level since March, 2023.

The broader dollar index =USD dipped 0.2% in Asia trade after President Trump said he would briefly pause an operation to help escort ships through the Strait of Hormuz, citing progress toward a comprehensive agreement with Iran.

Yuan sentiment was aided by news that China's service activity expanded at a faster pace in April, as well as by encouraging holiday consumption data.

"The vibrancy of the holiday economy, and signs of resilience in domestic consumption lay a solid foundation for yuan strength," Nanhua Futures said in a report.

Moreover, technical analysis indicates that the Chinese currency - which is currently in a consolidation pattern after strengthening against the dollar for a year - can extend its gains once it catches its breath.

Some caution the path ahead will likely be bumpy.

Huatai Futures expects the yuan to fluctuate between 6.80 and 6.90 per dollar in May, with the currency markets likely to be roiled by geopolitical volatility in the Middle East, uncertainty over U.S. Federal Reserve policy, and swings in sentiment around Sino-U.S. relations.

There are already fresh signs of tensions ahead of Trump's planned May 14-15 summit with Chinese leader Xi Jinping.

Beijing last month rolled out new trade rules that alarmed U.S. businesses while a senior Trump administration official said Washington was prepared to increase travel restrictions on China.

"The Sino-U.S. summit may roil sentiment" in the yuan market, Huatai Futures said.