Neither. It's an example of reported speech. No question is involved, and there is no relative, embedded or otherwise.
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JadelIs this a fused relative or an embedded question?One's first instinct is to say it's more like an embedded (i.e., indirect) exclamation.
JadelI told him how handsome he is.Is this a fuse relative or an embedded question?"how handsome he is" is a clause which is a direct object in the sentence; "him" is an indirect one there.