The US Dollar is expected to rise against the Chinese Yuan, but it may not reach the resistance level at 7.1910 right away. Recently, the USD hit a high of 7.1830 and closed at 7.1815, with support levels at 7.1750 and 7.1700. In the short term, traders initially anticipated a range between 7.1530 and 7.1730, but the USD exceeded this range. Current overbought conditions suggest that breaking through the key resistance may be difficult for now.

USD Upward Momentum

Over the next one to three weeks, the USD shows signs of slowing downward momentum, allowing for possible upward movement. A significant milestone for further gains is closing above 7.1910. Staying above 7.1660 will increase chances of reaching this target. It’s crucial to do your own research before making financial decisions, as the information shared comes with risks. This article doesn’t offer personalized investment advice and highlights the risks of market investments. Given the US Dollar’s strength against the Chinese Yuan, there are opportunities for derivative traders in the upcoming weeks. The currency pair has moved beyond its expected range, suggesting ongoing momentum that may continue. We believe buying call options set to expire in late August or September is a straightforward strategy for potential gains. This positive outlook is backed by recent economic data showing a split between the two economies. The latest US non-farm payroll report from early July 2025 exceeded expectations, adding 215,000 jobs. This supports the Federal Reserve’s steady interest rate policy. In contrast, China’s Caixin Manufacturing PMI for June fell to 50.2, signaling a fragile recovery.

Market Conditions and Strategic Considerations

However, the current overbought market suggests a minor pullback could happen before another upward move. The daily Relative Strength Index (RSI) is around 74, which often indicates a consolidation or slight dip. As a result, traders might look into bull call spreads to minimize initial costs and manage risk if the dollar stalls before hitting the key resistance. The critical level to monitor is 7.1910. A strong close above this level would signal the next upward move. If this happens, traders should consider adding to bullish positions, aiming for the 7.2500 level, which was last seen in late 2023. This key threshold should be closely watched by anyone looking for confirmation before increasing their investments. On the other hand, if the dollar fails to stay above the 7.1660 support level, the bullish outlook weakens. A drop below this level might push the dollar back toward 7.1500, similar to the brief decline seen in May 2025. In this situation, using protective put options can help safeguard existing long positions. The ongoing policy difference between the two central banks remains a fundamental driver. Recent comments from Federal Reserve officials indicate no imminent rate cuts, which continues to support the dollar. In contrast, the People’s Bank of China has maintained a supportive approach to strengthen its economy, putting gentle pressure on its currency. Create your live VT Markets account and start trading now.

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