"Pegged" in the sentence means "affixed with" or "attached to". The entire sentence means that when the US dollar strengthens, the Chinese Yen strengthens. If the US dollar weakens, the Chinese Yen weakens. If a Country A's currency is pegged to a Country B's currency, regardless of what happens in Country A, Country A's currency would only strengthen if Country B's currency becomes stronger. I hope this helps. :)

Yes, when a currency is pegged against another country's currency or gold that means that the government mandates the central bank to keep the exchange rate constant. The opposite policy of currency peg is floating exchange rate.